Firms' Financial and Corporate Governance Characteristics Association with Earning Management Practices: A Meta-Analysis Approach

Hamid, Fatima Abdul; Eddine, Chaabane Oussama Houssem; Ayedh, Abdullah Mohamed; Echchabi, Abdelghani Article Firms' Financial and Corporate Governance Characteristics Association with Earning Management Practices: A Meta- Analysis Approach Economic Review: Journal of Economics and Business Provided in Cooperation with: Faculty of Economics, University of Tuzla Suggested Citation: Hamid, Fatima Abdul; Eddine, Chaabane Oussama Houssem; Ayedh, Abdullah Mohamed; Echchabi, Abdelghani (2014) : Firms' Financial and Corporate Governance Characteristics Association with Earning Management Practices: A Meta-Analysis Approach, Economic Review: Journal of Economics and Business, ISSN 2303-680X, University of Tuzla, Faculty of Economics, Tuzla, Vol. 12, Iss. 2, pp. 49-72 This Version is available at: https://hdl.handle.net/10419/193839 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 /// * International Islamic university Malaysia, [email protected] ** International Islamic university Malaysia, oussama.ch3[email protected] *** Islamic Science University of Malaysia, [email protected] **** Effat University, Saudi Arabia, [email protected] 49 /// FIRMS’ FINANCIAL AND CORPORATE GOVERNANCE CHARACTERISTICS ASSOCIATION WITH EARNING MANAGEMENT PRACTICES: A META-ANALYSIS APPROACH Fatima Abdul Hamid *, Chaabane Oussama Houssem Eddine **, Abdullah Mohamed Ayedh ***, Abdelghani Echchabi **** ABSTRACT This paper aims to investigate the association between firm’s corporate governance and financial attributes (namely, board of directors’ size, board of directors’ independence, chief executive officer (CEO) duality, ownership structure, audit type, firm’s size, firm’s return and leverage) with earnings management practices. The study applies a comprehensive meta-analysis of the findings of 25 journal articles published between 2003 and 2013. The analysis permits this research to accumulate and assimilate the results of previous literature, and their generalization to a wider range of settings. The results showed that all corporate governance and financial characteristics variables have a significant association with earnings management practices. Keywords: meta-analysis, earnings management, corporate governance, financial characteristics. JEL Classification: M41, M42 1. INTRODUCTION In the modern day business environment, many corporations are faced with a considerable number of issues and challenges. Among others, these include the risk of future losses, volatility of company’s share price and the concern of being overly regulated, particularly for large corporations. These challenges resulted in the emergence of earnings management (EM). One of EM practices is income smoothing which consists of reducing income fluctuations in order to smoothen out the income level. Income smoothing portrays a more stable company, affects share price and may be used to cover possible loss in the future. Large corporations could also use EM to decrease their reported income, consequently paying less tax and becoming less profitably visible. Hence, EM may be used by large corporations to reduce political cost in order not to face more regulation. Therefore, based on the above, EM is basically the manipulation of earnings. Frequently, EM practices are in favour of managers. This is because potentially smoothening out the income flow and portraying a stable company infers that management is managing the company well, thus providing job security for the managers. Furthermore, it allows managers to receive performance-equivalent bonuses. Thus, more formally, EM “occurs when managers use judgment in financial reporting and in structuring transactions to alter financial report to either mislead some stakeholders about the underlying economic performance of the company or influence contractual outcomes that depend on reported accounting numbers” (Healy & Wahlen 1999, p. 368). Since EM practices distort financial reporting figures and may mislead users of financial statements, alleviating EM, particularly minimizing discretionary accruals, is /// . Hamid F. A., Eddine Ch. O. H, Ayedh A. M., Echchabi A. . /// 50 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 considered one of the main indicators of the quality of financial reporting. By deterring EM practices, financial statements are more reliable, informative, and accurate; especially, when managers’ profit maximization ambitions and financially opportunistic behaviour are well restricted by effective monitoring through good corporate governance mechanisms as well as firms’ financial attributes (e.g. leverage ratio, return, and company’s size). In view of the fact that maintaining the reliability and accuracy of the financial statements is vital, in the last few decades, there has been a growing interest amongst researchers to study different factors that might be able to reduce EM practices in various countries. These efforts to potentially alleviate EM practices seem to be more of a concern after the financial scandals (e.g. Enron) and the global financial crisis. In reviewing the literature, prior studies have provided insights into the effect of a number of factors on EM practices across different countries. However, the findings of these studies have been mixed (e.g. Alves 2011; Lo et al., 2010; Prencipe & Bar-Yosef 2011; Hassan & Ahmad 2012; Chaharsoughi & AbdulRahman 2013). Therefore, in order to better understand the factors that reduce EM practices and possibly untangle the mixed findings, the current study attempts to review EM practices and their determinants using a meta-analysis technique. The meta-analysis technique is formally defined as a “statistical analysis of a large collection of results from individual studies for the purpose of accumulating and integrating the findings” (Glass 1976, p. 3). This technique allows summarizing the findings of most previous studies in this area and provides precise and comprehensive results, which enhances the generalizability of the findings across settings. Furthermore, it extends prior meta-analysis studies by including recent studies and combining corporate governance attributes and firms’ financial performance characteristics as determinants of EM. More importantly, this study updates the specifications of metaanalysis by having sub-groupings of “before crisis” and “after crisis”. By having such a categorization, this study contributes not only by investigating and accumulating the factors that reduce EM practices but also analyses them under differing economic conditions, i.e. before and after the financial crisis, in order to determine their consistency. The remainder of the paper is organized as follows: Section two discusses the literature in this area. Section three presents and explains the methodology applied in the study. Section four discusses the main results, and section five concludes with the major findings, limitations and implications of the findings, and makes recommendations for further studies in this area. 2. LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT 2.1. Corporate governance The concept of agency theory has documented that there is a conflict of interest between principles and agents. Consequently, corporate governance (CG) was instigated to govern the corporation as a monitoring mechanism in order to restrict the opportunistic behaviour by managers. In this regard, CG has several elements, including board of directors, audit committee, internal auditing, etc. Prior studies have used different measures of CG effectiveness. These measures include board size, board independence, audit committee independence, and ownership concentration. Accordingly, several empirical studies have used different CG measures to examine its effectiveness, for instance, Mohd. Saleh and Mohd. Iskandar (2007) as well as Nelson and Devi (2013) have used audit committee, Park and Shin (2004) and Liu and Lu (2007) used board of directors, while Alves (2011) and Lo et al. (2010) used mixed . Firms’ financial and corporate governance characteristics association with earning … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 51 /// measures, and Siregar and Utama (2008) used a combination of board of directors, audit committee and ownership concentration. Among the abovementioned CG elements, most commonly used are board of directors (board size, board independence, and CEO duality), ownership concentration, and auditor type. Hence, the current study focuses on these three aspects. With respect to board size, prior studies have presented contradicting results. For instance, Chen, Firth, Gao and Rui (2006), Siregar and Utama (2008), Gulzar and Wang (2011), and Mohd, Saleh, Mohd. Iskandar and Rahmat (2005) found no significant impact of board size on EM. On the other hand, Chaharsoughi and AbdulRahman (2013) and Alves (2008) discovered that board size has a significant negative impact on EM, while Swastika (2013) revealed a significant positive impact of board size on EM. It is worth noting that the measurement for board size was the same in the above studies, which is the total number of board members. The previous studies also found different results for board independence. Gulzar and Wang (2011), Park and Shin (2004), Mohd. Saleh et al. (2005), Chaharsoughi and AbdulRahman (2013) and Nelson and Devi (2010) did not find a significant association between board independence and EM, while the results presented by Klein (2002), Xie, Davidson and Dadalt (2003), Cornett, McNutt and Tehranian (2009), Chen et al. (2006), Liu and Lu (2007), Alves (2008), and González and García-Meca (2013) indicated that board independence has a negative effect on EM. The above studies also used the same measurement of board independence, which is the percentage of outside directors on the board. With regard to CEO duality, Chen et al. (2006) Liu and Lu (2007) and Gonzalez and Garcia- Meca (2013) found no significant impact of CEO duality on EM. On the contrary, the findings of Gulzar and Wang (2011), Cornett et al. (2009), Xie et al. (2003) and Mohd, Saleh et al. (2005) show that CEO duality has a positive impact on EM, while Abed et al. (2012) found that CEO duality has a negative impact on EM. These studies used a similar proxy for CEO duality in the form of a dummy variable taking the value of 1 if the chairman and CEO positions are held by the same person and 0 otherwise. In terms of ownership concentration, Bauwhede, Willekens and Gaeremynk (2003) and Chaharsoughi and AbdulRahman (2013) did not find a significant association between ownership concentration and EM. However, Gulzar and Wang (2011) found that ownership concentration has a significant positive effect on EM, while Abed et al. (2012), Mohd. Saleh et al. (2005), and Liu and Lu (2007) found that ownership concentration has a negative impact on EM. Most of the studies used ownership concentration by shareholders (Charfeddine et al., 2013; Gonzalez & Garcia-Meca 2013), while a few studies used only institutional ownership concentration (Prencipe & Bar-Yosef 2011; Hassan & Ahmad 2012). Prior studies also found contradicting results for auditor type. For example, Abdullah and Mohd.Naser (2004), Banderlipe (2009), Marra, Mazzola and Prencipe (2011) and Gonzalez and Garcia-Meca (2013) found no significant effect of auditor type on restricting EM. However, Kim and Yi (2006) found a significant positive association, while Swastika (2013) found a significant negative relationship. It is noteworthy that these prior studies used the same measure for auditor type, which took a value of 1 if the audit firm was a Big-4 and 0 otherwise. Based on the above discussion, we propose the following hypotheses in an alternate form: H1a: board size is significantly associated with EM practices /// . Hamid F. A., Eddine Ch. O. H, Ayedh A. M., Echchabi A. . /// 52 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 H1b: board independence is significantly associated with EM practices H1c: CEO duality is significantly associated with EM practices H1d: ownership concentration is significantly associated with EM practices H1e: audit type is significantly associated with EM practices 2.2. Firm characteristics Regarding firm size, Hassan and Ahmad (2012), Bekiris and Doukakis (2011), Abed, Al-Attar and Suwaidan (2012), and Kim and Yi (2006) found no significant impact of firm size on EM. On the other hand, Leventis and Dimitropoulos (2012) and Cornett et al. (2009) found that firm size has a negative impact on EM, while Swastika (2013), Gonzalez and Garcia-Meca (2013), Nelson and Devi (2010), Chaharsoughi and Abdul Rahman (2013), Charfeddine et al. (2013), and Kim and Yoon (2008) found that firm size has a significant positive impact on EM. It should be noted that these studies used two different measures of firm size namely total assets (Bauwhede et al., 2003; Kim & Yoon 2008) and total equities (Alves 2011; Chen et al., 2006). With respect to leverage, Abed et al. (2012) and Charfeddine et al. (2013) did not find a significant relationship between leverage and EM. In contrast, Gonzalez and Garcia-Meca (2013), Leventis and Dimitropoulos (2012), Nelson and Devi (2010), Bekiris and Doukakis (2011), and Kim and Yi (2006) found that leverage has a significant positive effect on EM, while Kim and Yoon (2008) found that leverage has a significant negative effect on EM. Three proxies of leverage were used by these studies; liabilities to total assets ratio (Chi et al., 2010; Chen et al., 2011), debt to total assets ratio (Kang & Kim 2012), and debt to equity ratio (Leventis & Dimitropoulos 2012). Regarding return, Bekiris and Doukakis’ (2011) findings showed no significant impact of return on EM. On the other hand, González and García-Meca (2013) and Nelson and Devi (2013) found a significant positive effect of return on EM, while the results of Kim and Yi (2006) and Charfeddine et al. (2013) indicated a significant negative impact of return on EM. These studies used three different types of return, namely return on assets (ROA) (Chi et al., 2010), return on investment (ROI) (Banderlipe 2009) and annual stock return (Chen et al., 2006). Based on the aforementioned discussion the following hypotheses are proposed: H2a: firm’s size is significantly associated with EM practices H2b: firm’s leverage is significantly associated with EM practices H2c: firm’s profitability is significantly associated with EM practices 3. META-ANALYSIS TECHNIQUE This study conducts a meta-analysis of the determinants of EM practices. Prior studies stated that meta-analysis uses advanced statistical techniques in order to accumulate the findings of several researches to have a comprehensive view of the relationship amongst the variables concerned. According to Khlif and Souissi (2010), meta-analysis techniques help to precise and simplify the varying findings of different empirical studies. Although Lin and Hwang’s (2010) study also uses a meta-analysis technique, they do not take into consideration the economic conditions of the period before the crisis and after the crisis. Moreover, their findings on the association of corporate governance variables and EM differ from the current study possibly due to differences in terms of sample size, sample period, country categorization, measurement of variables, and different proxies used for EM. Thus, meta-analysis will enable the association and calculation of all . Firms’ financial and corporate governance characteristics association with earning … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 53 /// these different influencing factors on the results of those literatures (García- Meca & Sánchez Ballesta 2009; Lin & Hwang 2010). Moreover, prior studies used different methodologies in conducting the metaanalysis technique; for example, Lin and Hwang (2010) used combined Stouffer test to examine the effect of audit quality on EM, while, García-Meca and Sánchez Ballesta (2009) used effect size (r) to compute the effect of different corporate governance attribute on EM. This study follows a similar methodology of meta-analysis used in Hunter, Schmidt and Jackson (1982), Ahmed and Courtis (1999) and Khlif and Souissi (2010). Previous literatures that conducted the metaanalysis method utilized effect size (r). The effect size is used to compute the level of the relationship between the dependent variable and the specific independent variable. In this research, individual effect size is computed for every single study. In calculating effect size, different procedures are utilized depending on different statistics disclosed in different studies. In this study’s sample, one of the papers used z statistics (Gonzalez & Garcia- Meca 2013). The formula used in order to transform the ( ) results into r statistics is: (Ahmed & Courtis 1999; Khlif & Souissi 2010), while the other papers referred to in this study used t statistics. Therefore, the formula used in order to transform t statistics into r is: (1) Where is the degree of freedom. Once is calculated, the next stage is to calculate the mean correlation ( ) (Hunter et al., 1982). The mean correlation ( ) is computed as follows: = (2) Where, is the sample size for study i and is the Pearson correlation coefficient for study i. The third step according to Hunter et al. (1982) is to calculate the observed variance ( ) and the estimate of sampling error variance ( ). The formula for calculating is as follows: (3) The formula for computing is as follows: (4) Where is the number of individual studies utilized in the analysis. The fifth step is to compute the unbiased estimate of population variance ( ). The equation is shown as follows: (5) In this paper, the estimates of mean population and the standard deviation are used to formulate a 95% confidence interval as follows: (6) The sixth step is to calculate as suggested by Hunter et al. (1982) in order to examine the model’s statistical validity. The formula is as follows: = = (7) 4. METHODOLOGY AND DATA SOURCE In the prior meta-analysis studies like Ahmed and Courtis (1999), Garcia-Meca and Sanchez- Ballesta (2009) and Lin and Hwang (2010) a subgrouping of the studies has been conducted according to the nature of the country (such as developed, developing and underdeveloped), measurement of independent variables (such as firm size, /// . Hamid F. A., Eddine Ch. O. H, Ayedh A. M., Echchabi A. . /// 54 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 firm’s return, different measures of corporate governance, and others), nature of disclosure (such as voluntary and mandatory) and dependent variables (such as different measures and proxies used for EM). This subgrouping has been performed in order to escape the over influence of a distinct study in the meta-analysis (Khlif & Souissi, 2010). In addition, subgrouping helps in reducing heterogeneity. Thus, this research firstly subcategorizes the literatures depending on country’s development level (developed counties and developing countries). The second subgrouping is established on the nature of the independent variable measurement. Thus, the subgroup of size variable comprises two categories -total assets and others. For return, two subgroups were created and they are Return on Assets (ROA) and others. For leverage, three sub-categories were formed; total debt to total assets, total investments to total assets, and total debt to total equity. Regarding corporate governance variables, this study did not sub categorize them, since most of the studies included in this research utilized the same measurement. Lastly, due to financial crises’ effects on firms’ different practices it is expected that the crisis may have an impact on firms’ EM practices. Thus, this study sub categorizes the studies to those before and after the crises, depending on the sample period of the included studies. The studies that used a sample during the global financial crisis have been excluded from this sub-categorization due to lack of a sufficient number of studies to be included in the analysis. Variables such as CEO duality and auditor type have not been included in the before and after financial crisis sub grouping due to lack of studies that were available after the crisis. The initial sample contained 51 studies and later 26 studies had to be excluded due to the unavailable data to compute Consequently, the final sample of the study comprises 25 published papers on the determinants of EM practices from 2002 to 2013 on the basis of the availability of the literature, which represents 50 per cent of the initial sample. The studies that were not included are presented in Table 4.1. The papers included in the sample and their characteristics are presented in Table 1 and Table 2 in the Appendix. Table 4.1. List of excluded studies (no applicable data) No. Study Journal 1 Abdullah and Mohd-Nasir (2004) IIUM Journal of Economics and Management 2 Park and Shin (2004) Journal of Corporate Finance 3 Peasnell, Pope and Young (2005) Journal of Business Finance & Accounting 4 Abdul Rahman and Mohamed Ali (2006) Managerial Auditing Journal 5 Liu and Lu (2007) Journal of Corporate Finance 6 Mohd. Saleh and Mohd. Iskandar (2007) Asian Review of Accounting 7 Hashim and Devi (2008) Asian Journal of Business and Accounting 8 Sarkar, Sarkar and Sen (2008) Journal of Accounting, Auditing & Finance 9 Siregar and Utama (2008) The International Journal of Accounting 10 Charoenwon and Jiraporn (2009) Journal of Multi National Financial Management 11 Lo, Wong and Firth (2010) Journal of Corporate Finance 12 Iqbal and Strong (2010) International Journal of Managerial 13 Haw, Ho and Li (2011) Contemporary Accounting Research 14 Huang, Chan, Chang, and Wong (2012) Emerging Markets Finance & Trade 15 Hazarika, Karpoff and Nahata (2012) Journal of Financial Economics 16 Datta, Iskandar-Datta and Singh (2013) Journal of Banking & Finance 17 Abaoub, Homrani and Ben Gamra (2013) Journal of Business Studies Quarterly 18 Voeller, Bremert and Zein (2013) Auditing and Corporate Governance 19 Almeida-Santos, Dani, Machado and Krespi (2013) Management Research: The Journal of the Iberoamerican Academy of Management 20 Chiu, Teoh and Tian (2013) The Accounting Review 21 Roudaki (2013) Journal of Accounting – Business & Management 22 Stockmans, Lybaert and Voordeckers (2013) Journal of Family Business Strategy 23 Sun and Liu (2013) Managerial Auditing Journal 24 Tangjitprom (2013) International Journal of Economics and Finance . Firms’ financial and corporate governance characteristics association with earning … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 55 /// 5. EMPIRICAL FINDINGS The empirical results from the meta-analysis for each independent variable are shown in Table 5.1. The findings from the values indicate that board of directors’ size, board of directors’ independence, CEO duality, ownership structure, auditor’s type, company size, firm’s return and leverage are at 5% significance level in determining EM practices. The results show that all the explanatory variables included in the study have a significant impact on the EM practices. Thus, the results of this study support all the proposed hypotheses. More specifically, return seems to be the most influential factor, followed by the company size, then auditor type, while the independence of board of directors is the least influential among the selected variables. A more specific discussion on this aspect is provided in the following sub-sections. Moreover, the observed variance values indicate that the findings of the previous studies are mostly homogenous and proportionally corroborative. 5.1. Board size The findings of the overall meta-analysis sample presented in Table 5.2 show that the board of directors size significantly influences EM practices ( equals to 0.066), with a 95% confidence interval of -0.577 to 0.709. Similar results were also identified in the segmentation of developed and developing countries, with equals 0.120 and 0.058, respectively and with confidence intervals of - 0.425 to 0.666 and -0.602 to 0.719, respectively. Similar results were also found for the segmentation of studies before and after the global financial crisis with equals to 0.057 and 0.070, respectively, and with 95% confidence interval of -0.613 to 0.726 and - 0.554 to 0.694, respectively. This is compatible with most of the previous empirical studies including Chaharsoughi and AbdulRahman (2013) and Alves (2008). This implies that the more members form the board of directors the less likely EM manipulation may occur. Furthermore, it implies that the number of members on the board of directors influences the EM practices both before and after the crisis similarly. Table 5.1. The results of meta-analysis for each independent variable Variable Sample Study (K) Mean Correlation ( ) Observed Variance Estimated Error Variance Residual Variance Percentage Explained 95% Confidence Interval B-Size 5261 16 0.0657 0.1106 0.003 0.108 0.027 -0.577 to 0.709 586.76* B-Independence 6271 17 0.060 0.116 0.003 0.113 0.023 -0.601 to 0.721 734.01* CEO Duality 3658 11 0.078 0.020 0.003 0.017 0.146 -0.181 to 0.337 75.59* Ownership 5924 14 0.071 0.020 0.002 0.018 0.114 -0.193 to 0.335 122.60* Audit Type 3484 11 0.144 0.050 0.003 0.047 0.146 -0.282 to 0.570 182.70* Company Size 8635 24 0.157 0.057 0.003 0.054 0.047 -0.299 to 0.613 515.29* Return 6477 16 0.225 0.0319 0.002 0.030 0.070 -0.112 to 0.563 229.11* Leverage 8482 20 0.115 0.016 0.002 0.014 0.143 -0.114 to 0.345 139.79* *significant at 5%. /// . Hamid F. A., Eddine Ch. O. H, Ayedh A. M., Echchabi A. . /// 56 Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 5.2. Board independence The overall results of meta-analysis for board independence presented in Table 5.3 show that board independence is significantly associated with EM practices ( equals to 0.060) with confidence interval of -0.600 to 0.721. With respect to developed and developing sub-grouping, the results show a significant impact for sub-groups, whereby equals 0.126 and 0.031, respectively, with 95% confidence intervals of -0.405 to 0.657 and -0.678 to 0.741, respectively, for developed and developing countries. Similarly, the findings show significant impact of board independence for both before and after the crisis studies, with equaling 0.066 and 0.029 respectively and with confidence intervals from -0.579 to 0.711 and from -0.673 to 0.731 respectively. This implies that the more independent the board is, the more efficient it will be in hindering EM in specific companies. Overall, these findings are compatible with those of Lin and Hwang (2010) who also conducted an extensive meta-analysis study and found that board independence has significant influence on EM practices. This is also supported by previous empirical studies such as Alves (2008) and Gonzalez and Garcia- Meca (2013). Nevertheless, this contradicts a number of other studies e.g. Nelson and Devi (2010). This could be mainly due to the period covered in the latter study, which was marked by the occurrence of the global financial crisis. Table 5.2. The results of meta-analysis for board size Variable Sample Size Study (K) Mean Correlation ( ) Observed Variance Estimated Error Variance Residual Variance Percentage Explained 95% Confidence Interval General Meta- Analysis 5261 16 0.066 0.111 0.003 0.108 0.027 -0.577 to 0.709 586.76* Developed and Developing Countries Developed countries 887 5 0.120 0.083 0.005 0.077 0.066 -0.425 to 0.666 75.77* Developing countries 4374 11 0.058 0.116 0.002 0.114 0.022 -0.602 to 0.719 511.58* Before and After the Financial Crisis Before the crisis 3568 8 0.057 0.119 0.002 0.117 0.019 -0.613 to 0.726 427.48* After the crisis 528 3 0.070 0.107 0.006 0.101 0.053 -0.554 to 0.694 57.01* *significant at 5%. Table 5.3. The results of meta-analysis for board independence Variable Sample Size Study (K) Mean Correlation ( ) Observed Variance Estimated Error Variance Residual Variance Percentage Explained 95% Confidence Interval General-Meta- Analysis 6271 17 0.060 0.116 0.003 0.114 0.023 -0.600 to 0.721 734.01* Developed and Developing Countries Developed countries 1916 7 0.126 0.077 0.004 0.073 0.046 -0.405 to 0.657 152.40* Developing countries 4355 10 0.031 0.133 0.002 0.131 0.017 -0.678 to 0.741 582.23* Before and After the Financial Crisis Before the crisis 3568 8 0.066 0.110 0.002 0.108 0.020 -0.579 to 0.711 397.68* After the crisis 528 3 0.029 0.134 0.006 0.128 0.042 -0.673 to 0.731 70.81* *significant at 5%. . Firms’ financial and corporate governance characteristics association with earning … /// Economic Review – Journal of Economics and Business, Vol. XII, Issue 2, November 2014 63 /// 10. Bekiris, F.V. & Doukakis, L.C. (2011). Corporate governance and accruals earnings management. 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