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Choice of governance structure and earnings quality

Author

Listed:
  • Pamela Kent
  • Richard Anthony Kent
  • James Routledge
  • Jenny Stewart

Abstract

Purpose - The purpose of this paper is to examine the effectiveness of voluntary governance mechanisms in Australia. Design/methodology/approach - This study identifies similar choices of corporate governance by Australian firms and tests the effectiveness of the choices made based on the earnings quality of reported firms. Cluster analysis is conducted using governance best practice variables, firm size and an earnings quality variable. Findings - This paper’s results support the voluntary governance approach for smaller firms, but suggest that mandatory governance requirements could be beneficial for larger firms. Evidence suggests that a benefit accrues for larger firms with the adoption of governance best practice. Cluster analysis indicates that larger firms tend to exhibit higher levels of adoption of governance best practice than smaller firms. Originality/value - This paper adds to the literature by providing important information regarding the suitability of adoption of voluntary governance mechanisms in Australia.

Suggested Citation

  • Pamela Kent & Richard Anthony Kent & James Routledge & Jenny Stewart, 2016. "Choice of governance structure and earnings quality," Accounting Research Journal, Emerald Group Publishing Limited, vol. 29(4), pages 372-390, November.
    • Handle: RePEc:eme:arjpps:arj-06-2014-0056
    DOI: 10.1108/ARJ-06-2014-0056
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    Citations

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    Cited by:

    1. Pamela Kent & Richard Kent & Robyn McCormack & Julie‐Anne Tarr, 2023. "Disclosure of liquidity and cash flow statements by Australian superannuation funds before Covid‐19," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2653-2675, June.
    2. Irene M. Gordon & Karel Hrazdil & Johnny Jermias & Xin Li, 2021. "The Effect of Misalignment of CEO Personality and Corporate Governance Structures on Firm Performance," JRFM, MDPI, vol. 14(8), pages 1-20, August.

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