Corporate Governance, Executive Compensation, Firm Characteristics and Earnings Management of Companies Listed at Nairobi Securities Exchange
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Date
2021Author
Nyatichi, Veronica
Type
ThesisLanguage
enMetadata
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The objective of this research was to establish relationship among corporate governance,
executive compensation, firm characteristics and earnings management of listed companies in
Kenya with an aim to resolve research gaps identified in the literature. The gaps are: first,
there has been varied conclusions on how corporate governance impacts earnings
management. Secondly, there were no insights on how possible intervening and moderating
variables influences the relationship between corporate governance and earnings
management. Finally, documentation on how corporate governance, executive compensation
and firm characteristics influences earnings management is lacking. This study utilized four
hypotheses as a means of testing the objectives and a population of 56 companies for the
period 2008 to 2017. The main theories that supported this study were agency and positive
accounting. In addition, the study adopted positivism philosophy as its focus was on
hypothesis testing. Diagnostic tests conducted were serial correlation, stationarity,
multicollinearity and homogeneity as a means of testing the model reliability. Multiple linear
regression technique was adopted for data analysis. The findings were as follows: corporate
governance has a significant effect on earnings management, executive compensation has a
partial intervening effect on the relationship between corporate governance and earnings
management, firm profitability and firm size moderates the relationship between corporate
governance and earnings management and there is statistically significant relationship among
corporate governance, executive compensation, firm characteristics and earnings
management. Findings of this study adds to the existing knowledge on how corporate
governance influences earnings management by revealing that such relationship is not direct
and executive compensation, firm size and profitability impacts the relationship. The findings
also add to agency and positive accounting theories by providing support on the relevance of
having a structure in place that monitors the activities of managers to limit earnings
management practices. Since the findings showed that board size influences earnings
management, executive compensation mediates the relationship, firm size and firm
profitability moderates the relationship such information will help regulators of listed
companies when developing guidelines on good corporate governance structure and earnings
quality by incorporating key aspects of board of directors, components of executive
compensation and elements of firm size. It will also help future researchers by providing basis
for theoretical and empirical discussions
Publisher
University of Nairobi
Subject
Corporate GovernanceRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
- School of Business [1386]
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