THE CAUSAL RELATIONSHIP MODEL OF AUDIT COMMITTEE FORMER GOVERNMENT OFFICIALS AND CEO’S DISCRETION ON REAL EARNINGS MANAGEMENT
Keywords:
audit committee, former government, real activities management, causal relationship modelAbstract
The objectives of this research were twofold: 1) to examine a causal relationship model between audit committee members who were former government officials and CEOs’ discretion in real earnings management using empirical data, and 2) to analyze the effects of audit committee members who were former government officials and CEOs’ discretion on real earnings management of companies listed on the Stock Exchange of Thailand (SET). Financial statement data from 1,205 listed companies on the SET from 2017 to 2021 were analyzed using a structural equation model (SEM). The study found that 1) the causal relationship model was significantly fitted to the empirical data (x2 = 1.985, df = 2, x2 /df = .992, GFI = .997, AGFI = .984, IFI = 1.000, CFI = 1.000, RMSEA = .000). 2) The administrative power of the chief executive officer had a positive effect on real earnings management. 3) Audit committees comprising former government officials had a positive effect on the administrative power of the chief executive officer. 4) Audit committees comprised of former government officials with an understanding of accounting, finance, and internal control did not positively affect the chief executive officer's administrative power. This research provides policy recommendations for compliance units to consider good corporate governance.
Downloads
References
กนต์ณัฐ ปู่เกตุแก้ว. (2564). กรรมการและกรรมการตรวจสอบที่เป็นอดีตข้าราชการหรือนักการเมือง ความสัมพันธ์กับการใช้ดุลยพินิจของประธานเจ้าหน้าที่บริหารและการจัดการกําไรด้วยการสร้างรายการทางธุรกิจ. จุฬาลงกรณ์ธุรกิจปริทัศน์. 43(4), 60-75.
เกรียงไกร บุญเลิศอุทัย ศิลปพร ศรีจั่นเพชร และ อนุวัฒน ภักดี. (2564). คุณภาพคณะกรรมการมีผลต่อความมีเสถียรภาพกําไรในกิจการขนาดเล็ก: กรณีศึกษาบริษัทจดทะเบียนในตลาดหลักทรัพย์แห่งประเทศไทย. วารสารบริหารธุรกิจ. 44(169), 3-20.
ตลาดหลักทรัพย์แห่งประเทศไทย. (2560). หลักการกำกับดูแลกิจการที่ดีสำหรับบริษัทจดทะเบียน ปี 2560. สืบค้นเมื่อ 2 ธันวาคม 2565, จาก https://www.sec.or.th/cgthailand/TH/Documents/Regulation/CGCode.pdf. (2553ข.).
ตลาดหลักทรัพย์แห่งประเทศไทย. คู่มือคณะกรรมการตรวจสอบ. สืบค้นเมื่อ 2 ธันวาคม 2565, จาก https://www.sec.or.th/cgthailand/TH/Documents/Regulation/AChandbook.pdf
ธีระ เทิดพุทธธรรม. (2561). ตัวกำหนดการกำกับดูแลกิจการที่ดีที่มีต่อผลการดำเนินงานการบริหารด้านการเงินของบริษัทจดทะเบียนในประเทศไทย. วิทยานิพนธ์ ปรัชญาดุษฎีบัณฑิต สาขาวิชาการจัดการภาครัฐและเอกชน, มหาวิทยาลัยคริสเตียน.
อนุวัฒน์ ภักดี และ ศิลปพร ศรีจั่นเพชร. (2564). ผลกระทบของคุณลักษณะคณะกรรมการตรวจสอบต่อการจัดการกำไรที่แท้จริง: หลักฐานจากบริษัทจดทะเบียนในตลาดหลักทรัพย์แห่งประเทศไทย. วารสารวิชาการ มหาวิทยาลัยหอการค้าไทย. 41(4), 1-26.
Abid, G., Khan, B., Rafiq, Z. & Ahmed, A. (2014). Theoretical Perspectives of Corporate Governance. Bulletin of Business and Economics, 3(4), 166-175.
Abou-Moghli, A. A., & Al-Kasasbeh, M. M. (2012). Social Network and The Success of Business Start- Up. International Journal of Business and Management, 7(9), 134-140.
Al-Absy, M. S. M., KuIsmail, K. N. I., & Chandren, S. (2019). Audit Committee Chairman Characteristics and Earnings Management: The Influence of Family Chairman. Asia-Pacific Journal of Business Administration, 11(4), 339-370.
Almashaqbeh, A. A., Abdul-Jabbar, H. & Shaari, H. (2018). Real Earnings Management and Tax Considerations: A Conceptual Analysis. International Journal of Business Management and Commerce, 3(2), 25-35.
Aloui, M., & Jarboui, A. (2018). The Effects of Corporate Governance on The Stock Return Volatility: During the Financial Crisis. International Journal of Law and Management, 60(2), 478–495.
Baker, T. A., Lopez, T. J., Reitenga, A. L., & Ruch, G. W. (2019). The Influence of CEO and CFO Power on Accruals and Real Earnings Management. Review of Quantitative Finance and Accounting, 52 (1), 325–345.
Beyer, B.D., Nabar, S.M., & Rapley, E.T. (2018). Real Earnings Management by Benchmark-Beating Firms: Implications for Future Profitability. Accounting Horizons, 32(4), 59-84.
Dechsukhum, A., Tangeakchit, M. & Laohavisudht, S. (2022). Relationship Between Audit Committee Characteristics and Accounting Conservatism of Listed Companies in The Stock Exchange of Thailand. Songklanakarin Journal of Management Sciences, 39(2), 163-182.
Dinh, T. Q., & Calabrò, A. (2019). Asian Family Firms Through Corporate Governance and Institutions: A Systematic Review of The Literature and Agenda for Future Research. International Journal of Management Reviews, 21(1), 50–75.
Emerson, M. R. (1976). Social Exchange Theory. Annual Review of Sociology, 2(1976), 335-362.
Fan, P. H. J., Wong, T. J. & Zhang, T. (2007). Politically Connected CEOs, Corporate Governance, and Post-IPO Performance of China's Newly Partially Privatized Firms. Journal of Financial Economics, 84(2), 330-357.
Ghaleb, B. A. A., Kamardin, H., & Tabash, M. I. (2020). Family Ownership Concentration and Real Earnings Management: Empirical Evidence from an Emerging Market. Cogent Economics and Finance, 8(1), 1-17.
Hair, J. F., Howard, M. C., & Nitzl, C. (2020). Assessing Measurement Model Quality in PLS-SEM Using Confirmatory Composite Analysis. Journal of Business Research, 109(5–6), 101–110.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2013). Partial Least Squares Structural Equation Modeling: Rigorous Applications, Better Results and Higher Acceptance. Long Range Planning, 46(1-2), 1-12.
Hillman, A.J., Withers, M.C. & Collins, B.J. (2009). Resource Dependence Theory: A Review. Journal of Management, 35(6), 1404-1427.
Imai, M. (2006). Mixing Family Business with Politics in Thailand. Asian Economic Journal, 20(3), 241–256.
Jamil, N. N. (2020). The Power of Political Connections: Review on The Impacts of Audit Committee and Corporate Governance. Journal of Public Administration and Governance, 10(1), 1-14.
Jensen, M. C., & Meckling, W. H. (1976). Theory of The Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305-360.
Jing, J. (2019). Does Risk Management Committee Gender Diversity Matter? A Financial Problems Perspective. Managerial Auditing Journal, 34(8), 1050-1072.
Kelloway, E. K. (2015). Using Mplus for Structural Equation Modeling. Thousand Oaks, CA: Sage.
Lin, T., Hutchinson, M., & Percy, M. (2015). Earnings Management and The Role of The Audit Committee: An Investigation of The Influence of Cross-Listing and Government Officials on The Audit Committee. Journal of Management and Governance, 19(1), 197-227.
Marzuki, M. M., Haji-Abdullah, N. M., Othman, R., Wahab, E. A., & Harymawan, I. (2019). Audit Committee Characteristics, Board Diversity, and Fraudulent Financial Reporting in Malaysia. Asian Academy of Management Journal, 24(2), 143–167.
Minnick, K., & Noga, T. (2010). Do Corporate Governance Characteristics Influence Tax Management.? Journal of Corporate Finance, 16(5), 703–718.
Pfeffer, J., & Salafncik, G. R. (2003). The External Control of Organizations: A Resource Dependence Perspective. Stanford University Press.
Qamhan, M. A., Che Haat, M. H., Hashim, H. A., & Salleh, Z. (2018). Earnings Management: Do Attendance and Changes of Audit Committee Members Matter? Managerial Auditing Journal, 33 (8/9), 760-778.
Roychowdhury, S. (2006). Earnings Management through Real Activities Manipulation. Journal of Accounting and Economics, 42(3), 335–370.
Sultana, N. (2015). Audit Committee Characteristics and Accounting Conservatism. International Journal of Auditing, 19(2), 88-102.
Teng, L., Marion H., & Majella P., (2015). Earnings Management and The Role of The Audit Committee: An Investigation of The Influence of Cross-Listing and Government Officials on The Audit Committee. Journal of Management & Governance, Springer; Accademia Italian di Economia Azaindole (AIDEA), 19(1), 197-227.
The ASX Corporate Governance Council. (2019). Corporate Governance Principles and Recommendations. Retrieved 2 December 2022, from https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-fourth-edn.pdf
The Organization for Economic Co-operation and Development. (2021). Corporate Governance 2021. Retrieved 2 December 2022, from https://www.oecd.org/corporate/OECD-Corporate-Governance-Factbook.pdf
Wasserman, S. & Faust, K. (1994). Social Network Analysis: Methods and Applications. Cambridge: Cambridge University Press.
Watts, R. L., & Zimmerman, J. L. (1986). Positive Accounting Theory. London: Prentice-Hall Inc.
Yonus Z. I. & Klein, C. (2019). Board Composition and Corporate Risk-Taking: A Review of Listed Firms from Germany and the USA. Journal of Applied Accounting Research, 20(4), 526–542.
