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Corporate Governance pp 309–322Cite as

Board Independence, Corporate Governance and Earnings Management in France

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Abstract

The financial markets increasingly look to corporate governance mechanisms to help guarantee reliable and accurate financial information. The evaluation of the effectiveness of this role is therefore an interesting empirical question. This question has been brought to the fore by recent financial scandals and made crucial by the recent changes in the French institutional context. It is from this standpoint that this chapter aims to examine the influence of the board independence and two other corporate governance mechanisms, namely the audit quality and the ownership structure, on earnings management as measured by discretionary accruals. The empirical findings show that the presence of independent directors can moderate the management of discretionary accruals. The Big 4 auditors can also limit this discretionary adjustment. However, no statistically significant relationship was observed between dispersion vs. concentration of ownership structure and these accruals. This study makes an interesting contribution by making it possible to evaluate empirically the effectiveness of the role of three important corporate governance mechanisms. It adds to the limited research into the relationship between corporate governance and earnings management in France. Thus, it should be of interest to academics as well as regulators in preparing and amending corporate governance laws.

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Authors and Affiliations

  1. IESEG School of Management, Lille, France

    Ramzi Benkraiem

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  1. Ramzi Benkraiem
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Correspondence to Ramzi Benkraiem .

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Editors and Affiliations

  1. , Dept. of Accounting Finance and Law, Champagne School of Management, Avenue Pierre Brossolette 217, Troyes Cedex, 10002, France

    Sabri Boubaker

  2. , Cambridge Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, United Kingdom

    Bang Dang Nguyen

  3. , Dept. of Finance & Information Systems, ISC Paris School of Management, Boulevard du Fort de Vaux 22, Paris, 75017, France

    Duc Khuong Nguyen

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© 2012 Springer-Verlag Berlin Heidelberg

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Benkraiem, R. (2012). Board Independence, Corporate Governance and Earnings Management in France. In: Boubaker, S., Nguyen, B., Nguyen, D. (eds) Corporate Governance. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-31579-4_13

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