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The Influence of Monitoring Mechanisms and Opportunistic Behaviors Toward Earnings Management

  • Conference paper
A New Paradigm for International Business

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

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Abstract

Corporate collapse which resulted from financial scandals keeps increasing in numbers. This study examines the influence of monitoring mechanisms and opportunistic behaviors toward earnings management (EM). Discretionary accrual is a proxy of EM in this study. Monitoring behaviors are proxied by two variables named leverage and dividend. Opportunistic behaviors are proxied by free cash flow (FCF) and profitability (ROA). 481 companies listed in Bursa Malaysia were collected, while another 401 public companies were collected from the Australian Stock Exchange. Several statistical analyses were carried out to examine the influence of monitoring mechanisms (leverage and dividend) and opportunistic behaviors (free cash flow and profitability) toward EM. The findings of this study revealed that only opportunistic behaviors have significant influence on EM in Malaysia. However, for Australia, the result indicated that only one determinant of monitoring mechanisms (dividend) has significant relationship with EM. The same goes to opportunistic behaviors, which indicated that only FCF has significant relationship with EM. For pool data countries, the result revealed that the hypotheses were also partially supported by both monitoring mechanisms and opportunistic behaviors toward EM.

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Acknowledgment

We would like to thank the Accounting Research Institute (ARI) and the Research Management Institute (RMI), Universiti Teknologi MARA (UiTM), in collaboration with the Ministry of Education Malaysia (MoE), for providing support for this research project. We are indeed very grateful for the grant; without which, we would not be able to carry out the research.

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Authors and Affiliations

  1. Universiti Teknologi Mara (UiTM) & Accounting Research Institute (ARI), Shah Alam, Malaysia

    Aziani Idris

  2. Accounting Research Institute (ARI) & Universiti Teknologi Mara (UiTM), Shah Alam, Malaysia

    Zuraidah Mohd Sanusi

  3. Universiti Teknologi Mara (UiTM) & Accounting Research Institute (ARI), Perak, Malaysia

    Mohd Taufik Mohd Suffian

Authors
  1. Aziani Idris
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  2. Zuraidah Mohd Sanusi
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Correspondence to Mohd Taufik Mohd Suffian .

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Editors and Affiliations

  1. Edith Cowan University, Perth, West Australia, Australia

    Hadrian Geri Djajadikerta

  2. Edith Cowan University, Perth, West Australia, Australia

    Zhaoyong Zhang

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Idris, A., Mohd Sanusi, Z., Mohd Suffian, M.T. (2015). The Influence of Monitoring Mechanisms and Opportunistic Behaviors Toward Earnings Management. In: Djajadikerta, H., Zhang, Z. (eds) A New Paradigm for International Business. Springer Proceedings in Business and Economics. Springer, Singapore. https://doi.org/10.1007/978-981-287-499-3_13

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