Refine
Year of publication
- 2018 (1) (remove)
Document Type
- Doctoral Thesis (1) (remove)
Keywords
- Financial Reporting (1) (remove)
Institute
- Fakultät Wirtschaftswissenschaften (1) (remove)
In this dissertation, the author focuses on the link between (internal) corporate governance structures and processes and firms financial reporting quality. Specifically, the dissertation aims to provide insights into the following general research question: What is the effect of different corporate governance stakeholders on the financial reporting quality of a firm? The author provides insights into this question through three different articles. Paper #1 explores the relationship between family firm status and earnings management and synthesizes and explains previous research findings with the help of meta-analytic methods that are still uncommon in financial accounting research. The authors find a negative relationship between family firms and earnings management on average across 37 primary studies (and 305 effect sizes in total). Furthermore, they show that the considerable variation in size and direction of primary effect sizes can be explained by researchers choice of study design, earnings management proxy and different institutional settings. The second paper explores institutional owners as a different set of shareholders and their impact on financial reporting quality. The study enables the authors to compare the results against the backdrop of the previous chapter and to see different rationales that managers in institutionally-owned companies might have to engage in earnings management. Here, the authors study 511 effect sizes from a total of 87 primary studies and find that the average effect is slightly negative, meaning institutional owners on average can get more transparent earnings figures from the companies they invest in. Similar to the work they did on family firms, they find considerable heterogeneity between results from primary studies. Specifically, their multivariate meta-regression models can explain 26% of the variability in effect sizes, mainly attributable to study design choices. The third paper is concerned with managers and how managerial personality drives the propensity to engage in fraudulent accounting activities. The author uses a primary sample of 956 professionals, who work in accounting and finance departments, and ask them to rate their immediate superior on dark triad personality traits, as well as common actions taken by management to obscure and manipulate earnings figures. He finds that managers with high ratings for dark triad personality traits engage to a greater extent in fraudulent accounting practices, than managers scoring low on the dark triad scale. Moreover, the author can show that traditional risk management mechanisms, like internal audit departments, are only partially effective. Specifically, he finds that only internal audit departments that are fully staffed by external personnel can curb the adverse effect of dark triad managers on financial reporting quality. This suggests that managers with dark personalities can take advantage of mixed or entirely in-house internal audit departments. Overall, this dissertation contributes significantly to both literature streams of corporate governance and financial reporting quality. This work can explain a significant degree of heterogeneity in previous findings on the link between different kinds of ownership and earnings management. Further, it stresses that the considerable variation in current findings is not mainly attributable to cross-country differences, as previously suggested, but in no small part attributable to study design features. Finally, the author can provide additional evidence on current research linking executive personality traits and financial reporting practices.