Board, audit committee, culture and earnings management: Malaysian evidence

Purpose Aims to investigate the extent of the effectiveness of monitoring functions of board of directors, audit committee and concentrated ownership in reducing earnings management among 97 firms listed on the Main Board of Bursa Malaysia over the period 2002‐2003. Design/methodology/approach The current study employs the cross‐sectional modified version of Jones, where abnormal working capital accruals are used as proxy for earnings management. Findings The study reveals that earnings management is positively related to the size of the board of directors. This supports the view that larger boards appear to be ineffective in their oversight duties relative to smaller boards. A possible explanation for the…