The impact of corporate internationalization degree and monitoring mechanism to earnings management

• Main Authors: Wei-Ling Chiu, 邱暐苓
• Other Authors: Dr.Hsin-Mei Lin
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/92911210345691035483

碩士 === 國立暨南國際大學 === 國際企業學系 === 93 === In the past, related researches which investigate agency problem between managers and shareholders in organizations measure probable agency cost by managers’ financial performance. However, several serious financial frauds induce shareholders’ suspicion about those financial indexes which is acted as information channel of managers’ behaviors because those numbers are discretional by managers. This kind of earnings management (or earning manipulating) behaviors misunderstand shareholders’ judgment and further increase their burden of agency cost. Therefore, this research try to examine the legitimacy of financial indexes, which were treated as measurement of agency cost, by adopting earnings management model built by Modified Jones Model (Dechow et al., 1995). The purpose of this research is to see if corporations’ monitoring mechanism is well-structured and healthy to mitigate the problem of earnings management, and the relationship between internationalization and earnings management. I take 147 electronics companies as my samples and use cross-sectional firm/year data to run multi-regression model. It is interested to find out that the board and supervisors’ independence and foreign institution investors do not actually enhance the independence of corporations’ monitoring effects. On the other hand, the two variables of internationalization degree have totally different effects. The number of subsidiaries is positively influences the possibility of earnings management, while the investment proportion of foreign subsidiaries is negative to earnings management. It means corporations may exits the situations that selling inventories with higher price to foreign subsidiaries or fake sales arranging.