Subject: Business Research Methods

Instructor: Sir Waqas Bin Khidmat

Assign no. 02

Roll no. 205125

A critical literature review
(Nguyen et al., 2021) It has been found that ownership concentration and state ownership
positively affect EM. In contrast, the managerial ownership and foreign ownership negatively
affects EM. By using the methods, (i) policy selection and accounting method (ii) real
transactions (iii) total accrual basis (iv) specific accrual (v) appropriation of profit (vi) income
smoothing. (Borisova et al., 2012; Dahlquist & Robertsson, 2001)
(Chung et al., 2002) Another study indicates that institutions with large shareholdings play an
active role in monitoring managerial opportunism as it relates to accounting discretion. With the
help of regressions of discretionary accruals. (Ball & Shivakumar, 2005; Santana & Sarquis,
2021)
(Borisova et al., 2012) The empirical results show that government ownership is generally
harmful to the corporate governance of the firm, suggesting that firm value maximization is not
always the goal of state owners. First they use firm random effects to regress corporate
governance scores (CGQs) on the government ownership variable. Next, we use logit regressions
to test whether the likelihood of having an independent board (board independence) is affected
by corporate governance. (Peasnell et al., 2005; Xie et al., 2003)
(Ball & Shivakumar, 2005) The result is not affected by controls for size, leverage, industry
membership and auditor size, or by allowing endogenous listing choice. The result enhances
understanding of private companies, which are predominant in the economy. With the help of
regression models. (Borisova et al., 2012; Xie et al., 2003)
(Santana & Sarquis, 2021) it has been observed that the evidence that two components of
earnings, cash flow from operations and changes in working capital, are used to achieve
increases in earnings. By using the methods of median and standard deviation. (Leuz et al., 2003;
Roychowdhury, 2006)
(Leuz et al., 2003) The results suggest that outsider economies with relatively dispersed
ownership, strong investor protection, and large stock markets exhibit lower levels of earnings
management than insider countries with relatively concentrated ownership, weak investor
protection, and less developed stock markets. With the help of descriptive stats methodology.
(Peasnell et al., 2005; Xie et al., 2003)
(Peasnell et al., 2005) The results which are found are robust to the choice of proxy for pre
managed earnings, suggesting that monitoring by outside directors contributes to the containment
of earnings management. With the help of descriptive stats. (Borisova et al., 2012; Xie et al.,
2003).
(Healy & Wahlen, 2016) Few studies have looked at how common observed earnings
management is, both in the sample and the public, and whether it can be attributed to a small
number of companies. Standard-setters may find this information useful in determining the
extent of earnings management and the overall integrity of financial reporting. A number of
specific abuses of management's reporting judgement are mentioned in recent SEC concerns
about earnings management. Finally, the contradictory results on the impact of earnings
management on resource allocation call for more study. However, a number of more recent
studies narrow the scope of their experiments to focus on the management of earnings using
certain accruals, like bank loan loss provisions, claim loss reserves for property casualty insurers,
and deferred tax valuation allowances. There is evidence to support the use of claim loss reserves
by insurers and banks to manage profitability, notably to satisfy regulatory requirements for loan
loss provisions. There is minimal proof that businesses use deferred tax valuation allowances to
control earnings.

Ball, R., & Shivakumar, L. (2005). Earnings quality in UK private firms: Comparative loss
recognition timeliness. Journal of Accounting and Economics, 39(1), 83–128.
https://doi.org/10.1016/j.jacceco.2004.04.001
Borisova, G., Brockman, P., Salas, J. M., & Zagorchev, A. (2012). Government ownership and
corporate governance: Evidence from the EU. Journal of Banking and Finance, 36(11),
2917–2934. https://doi.org/10.1016/j.jbankfin.2012.01.008
Chung, R., Firth, M., & Kim, J. B. (2002). Institutional monitoring and opportunistic earnings
management. Journal of Corporate Finance, 8(1), 29–48. https://doi.org/10.1016/S0929-
1199(01)00039-6
Dahlquist, M., & Robertsson, G. (2001). Direct foreign ownership, institutional investors, and
firm characteristics. Journal of Financial Economics, 59(3), 413–440.
https://doi.org/10.1016/S0304-405X(00)00092-1
Healy, P. M., & Wahlen, J. M. (2016). Accounting Horizons. Accounting Horizons, 30(4), 525–
528. https://doi.org/10.2308/1558-7975-30.4.525
Leuz, C., Nanda, D., & Wysocki, P. D. (2003). Earnings management and investor protection:
An international comparison. Journal of Financial Economics, 69(3), 505–527.
https://doi.org/10.1016/S0304-405X(03)00121-1
Nguyen, H. A., Lien Le, Q., & Anh Vu, T. K. (2021). Ownership structure and earnings
management: Empirical evidence from Vietnam. Cogent Business and Management, 8(1).
https://doi.org/10.1080/23311975.2021.1908006
Peasnell, K. V., Pope, P. F., & Young, S. (2005). Board Monitoring and Earnings Management:
Do Outside Directors Influence Abnormal Accruals? SSRN Electronic Journal,
32(October), 1311–1346. https://doi.org/10.2139/ssrn.249557
Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal
of Accounting and Economics, 42(3), 335–370.
https://doi.org/10.1016/j.jacceco.2006.01.002
Santana, V. de F., & Sarquis, R. W. (2021). Earnings management to avoid earnings decreases
and losses. Revista Catarinense Da Ciência Contábil, 20, e3153.
https://doi.org/10.16930/2237-7662202131531
Xie, B., Davidson, W. N., & Dadalt, P. J. (2003). Earnings management and corporate
governance: The role of the board and the audit committee. Journal of Corporate Finance,
9(3), 295–316. https://doi.org/10.1016/S0929-1199(02)00006-8