Does Corporate Governance Affect Earnings Management? Evidence from the US P&C Insurance Industry

Stefano Monferra', Sebastiano Mazzù, Maria Grazia Starita

Risultato della ricerca: Contributo in rivistaArticolo in rivista

Abstract

Our study investigates whether corporate governance plays a role in mitigating earnings management in the US Property and Casualty insurance industry. Using a direct measure of managerial bias, our results show the following: first, stock-based components of CEO compensation are associated with reserving practices only when we control for the cross-effect between these components and the presence of a Big4 external auditor; second, independent directors, part of internal company monitoring mechanisms, and the main shareholder, among the external monitoring mechanisms, are effective in mitigating earnings manipulation; and third, the preliminary exercise on the effect of Sarbanes Oxley regulation coming into force reveals that the new regulation on governance has minimal or no impact on the relationship between corporate governance and earnings management in the insurance industry - it has long been heavily regulated for risk and governance.
Lingua originaleEnglish
pagine (da-a)203-224
Numero di pagine22
RivistaJOURNAL OF FINANCIAL MANAGEMENT, MARKETS AND INSTITUTIONS
DOI
Stato di pubblicazionePubblicato - 2015

Keywords

  • Corporate Governance
  • P&C Insurers
  • Reserve Manipulation

Fingerprint

Entra nei temi di ricerca di 'Does Corporate Governance Affect Earnings Management? Evidence from the US P&C Insurance Industry'. Insieme formano una fingerprint unica.

Cita questo