A Study of Relationship Between Institutional Investors and Board of Director With Earnings Management

Subject Areas : Futurology

Gh. Talebnia ¹ ( نویسنده مسئول یا طرف مکاتبه )
A. Taftian ² ( ندارد )

Received: 2008-04-08 Accepted : 2008-09-23 Published : 2009-12-22

Keywords: Institutional investors, Board of Director, earnings management, The Number of Outside Director, Discretionary Accrual,

Abstract :

The corporate governance system has engaged in circumstance of manage and control of corporate,and especially the role of board of directors in this connection, and explains framework of an effectiveanswering system. Corporate governance can be cause decrease of earnings management (decrease ofdiscretionary accrual). Two basic mechanism of corporate governance system are: 1) institutionalinvestors and 2) Board of directors. In this article we will engage in relationship between these twomechanisms with earnings management. In this research, we examined the relationship betweeninstitutional investors and board of directors with Earnings management in the companies accepted inthe Tehran stock exchange. In the way of this goal, 75 accepted companies in the Tehran stockexchange had been chosen during 2004-2007. In this research, we adopt discretionary accrual measureof earnings management. Statistic results showed that there is a significant relation betweeninstitutional ownership, managerial share ownership and the number of outside directors with earningsmanagement. That is, increase institutional ownership, managerial share ownership and the number ofoutside directors can be cause decrease of earnings management.