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The effectiveness of board of directors and family ownership: interaction and impact on the discretionary accruals

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  • Anas Ghazalat

Abstract

Firms can curb managerial opportunistic behaviours through applying corporate governance mechanisms effectively. Using a sample of 114 Jordanian firms listed on ASE for the period from 2009 until 2015, this study investigates the combined effect of the board of directors and family ownership on the discretionary accruals. The results show that the higher effectiveness of board of directors plays a higher monitoring role to minimise discretionary accruals practices as one of the opportunistic-behaviours. Results also show that the monitoring role of the board of directors is positively moderated in firms with family ownership. This proves that board of directors as a whole in firms with family ownership is unlikely to be effective. This indicates that the corporate governance plays a pivotal role in mitigating the opportunistic behaviours and minimises the divergence gap under the traditional agency problem while it has become a legal fiction when the central-agency problem exists.

Suggested Citation

  • Anas Ghazalat, 2021. "The effectiveness of board of directors and family ownership: interaction and impact on the discretionary accruals," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 17(1/2), pages 36-72.
    • Handle: RePEc:ids:ijaape:v:17:y:2021:i:1/2:p:36-72
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