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Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe

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dc.contributor Svenska handelshögskolan, institutionen för finansiell ekonomi och ekonomisk statistik, finansiell ekonomi sv
dc.contributor Hanken School of Economics, Department of Finance and Statistics, Finance en
dc.contributor.author Ahmed, Sheraz
dc.date.accessioned 2009-09-02T09:08:54Z fi
dc.date.accessioned 2011-03-02T13:21:48Z
dc.date.available 2009-09-02T09:08:54Z fi
dc.date.available 2011-03-02T13:21:48Z
dc.date.issued 2009-09-02
dc.identifier.isbn 978-952-232-056-8
dc.identifier.issn 0424-7256
dc.identifier.uri http://hdl.handle.net/10227/415
dc.identifier.uri URN:ISBN:978-952-232-056-8
dc.description.abstract A growing body of empirical research examines the structure and effectiveness of corporate governance systems around the world. An important insight from this literature is that corporate governance mechanisms address the excessive use of managerial discretionary powers to get private benefits by expropriating the value of shareholders. One possible way of expropriation is to reduce the quality of disclosed earnings by manipulating the financial statements. This lower quality of earnings should then be reflected by the stock price of firm according to value relevance theorem. Hence, instead of testing the direct effect of corporate governance on the firm’s market value, it is important to understand the causes of the lower quality of accounting earnings. This thesis contributes to the literature by increasing knowledge about the extent of the earnings management – measured as the extent of discretionary accruals in total disclosed earnings - and its determinants across the Transitional European countries. The thesis comprises of three essays of empirical analysis of which first two utilize the data of Russian listed firms whereas the third essay uses data from 10 European economies. More specifically, the first essay adds to existing research connecting earnings management to corporate governance. It testifies the impact of the Russian corporate governance reforms of 2002 on the quality of disclosed earnings in all publicly listed firms. This essay provides empirical evidence of the fact that the desired impact of reforms is not fully substantiated in Russia without proper enforcement. Instead, firm-level factors such as long-term capital investments and compliance with International financial reporting standards (IFRS) determine the quality of the earnings. The result presented in the essay support the notion proposed by Leuz et al. (2003) that the reforms aimed to bring transparency do not correspond to desired results in economies where investor protection is lower and legal enforcement is weak. The second essay focuses on the relationship between the internal-control mechanism such as the types and levels of ownership and the quality of disclosed earnings in Russia. The empirical analysis shows that the controlling shareholders in Russia use their powers to manipulate the reported performance in order to get private benefits of control. Comparatively, firms owned by the State have significantly better quality of disclosed earnings than other controllers such as oligarchs and foreign corporations. Interestingly, market performance of firms controlled by either State or oligarchs is better than widely held firms. The third essay provides useful evidence on the fact that both ownership structures and economic characteristics are important factors in determining the quality of disclosed earnings in three groups of countries in Europe. Evidence suggests that ownership structure is a more important determinant in developed and transparent countries, while economic determinants are important determinants in developing and transitional countries. fi
dc.language.iso en
dc.publisher Svenska handelshögskolan sv
dc.publisher Swedish School of Economics and Business Administration en
dc.relation.ispartofseries Economics and Society
dc.relation.ispartofseries 206
dc.rights Publikationen är skyddad av upphovsrätten. Den får läsas och skrivas ut för personligt bruk. Användning i kommersiellt syfte är förbjuden. sv
dc.rights This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited. en
dc.rights Julkaisu on tekijänoikeussäännösten alainen. Teosta voi lukea ja tulostaa henkilökohtaista käyttöä varten. Käyttö kaupallisiin tarkoituksiin on kielletty. fi
dc.subject ownership structure fi
dc.subject corporate governance fi
dc.subject earnings management fi
dc.subject accruals fi
dc.subject cash flows fi
dc.subject discretionary accruals fi
dc.subject value relevance fi
dc.subject entrenchment effect fi
dc.subject incentive alignment fi
dc.subject Russia fi
dc.subject Eastern Europe fi
dc.subject.other Finance fi
dc.title Essays on Corporate Governance and the Quality of Disclosed Earnings: Across Transitional Europe fi
dc.type.ontasot Doctoral thesis en
dc.type.ontasot Väitöskirja fi
dc.type.ontasot Doktorsavhandling sv
dc.type.dcmitype Text
dc.date.accepted 2009-09-11

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