Corporate Governance and Earnings Management: Evidence from Indian Firms
Author(s): Dr. Arun Kumar Jain
Publication #: 2505020
Date of Publication: 11.08.2018
Country: India
Pages: 1-9
Published In: Volume 4 Issue 4 August-2018
Abstract
This paper explores the relationship between corporate governance and earnings management in Indian firms, analyzing how governance mechanisms influence financial reporting practices. With a focus on regulatory frameworks, ownership structures, and the role of family-controlled businesses, the study highlights the challenges and reforms introduced in India to address earnings manipulation. The paper reviews key corporate governance regulations, such as Clause 49 and the Companies Act of 2013, and assesses their effectiveness in curbing earnings management. It also compares India’s corporate governance practices with global trends, noting the persistence of earnings manipulation, particularly in family-owned firms, which constitute a significant portion of the Indian corporate sector. Despite reforms, enforcement gaps and ownership concentration continue to undermine the effectiveness of governance mechanisms. This study suggests that strengthening enforcement, enhancing transparency, and adapting governance reforms to the Indian business environment are critical to reducing earnings manipulation. The findings underline the need for a more robust corporate governance framework to align Indian firms with global best practices and foster ethical business conduct. The paper concludes that while progress has been made, continuous efforts are required to mitigate earnings management and ensure sustainable corporate growth in India.
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