Corporate Governance and Earnings Quality: Evidences from Exchanges in ASEAN Economics Community
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Abstract
The objective of this study was to study the relationship between corporate governance and earnings quality of listed company in Stock Exchange in ASEAN Economics Community. For the methodology, the pooled ordinary least square was used as the method for estimating parameters in a linear regression model. The sample was 527 listed companies in Stock Exchange of Thailand, Bursa Malaysia, Indonesia Stock Exchange, Philippine Stock Exchange and Singapore Exchange during 2013-2015. The data was collected from Bloomberg L.P. database. Based on Dechow and Dichev (2002) model, the earnings quality was calculated from the standard deviation of residuals, which was derived from the multiple regression equation between the change in working capital and cash flow from operation in the past, present and future years.
The results of this study indicated that in Thailand, Management Shareholdings and Ratio of Independence to Total Board had positive and statistically significant effect on earnings quality. Board Size had negative and statistically significant effect on earnings quality in Thailand. Moreover in Philippines, Board Size had negative and statistically significant effect on earnings quality, meanwhile Management Shareholdings had positive and statistically significant effect. In Singapore, Management Shareholdings had negative and statistically significant effect on earnings quality. In Malaysia and Indonesia, Management Shareholdings, Ratio of Independence to Total Board, and Board Size had no statistically significant effect on earnings quality.
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