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Board Independence and Corporate Fraud: The Case of Tunisian Firms

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  • Hamadi Matoussi

    (Manouba University, Tunisia)

  • Ines Gharbi

Abstract

The question we address in this paper is: what is the role played by corporate governance in mitigating financial statement fraud in emerging markets? To answer this question, we investigate the link between corporate financial statement fraud and Board of Directors on a sample of 64 Tunisian firms, with 32 fraud firms matched by 32 no fraud similar (control) companies. Since our dependent variable is binary (fraud versus no fraud), we use a logistic regression to explain how the probability of fraud can be determined by governance variables. Our main results show that there is a significant difference in governance variables between fraudulent and control firms. Moreover, we confirm the importance of governance variables in explaining the probability of fraud since we find that firms with a board of directors dominated by family members and with tenure of outside directors are more likely to commit fraud in financial statement.

Suggested Citation

  • Hamadi Matoussi & Ines Gharbi, 2011. "Board Independence and Corporate Fraud: The Case of Tunisian Firms," Working Papers 620, Economic Research Forum, revised 09 Jan 2011.
    • Handle: RePEc:erg:wpaper:620
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    Cited by:

    1. Erlane K Ghani & Ham Xairyani Mohamed & Kamaruzzaman Muhammad, 2019. "Board Characteristics and Foreign Direct Investment in Public Listed Property Companies: A Malaysian Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 116-131, May.
    2. Jinhui Kuang, 2014. "Determinants of Internal and External Corporate Governance Predictors of Operational Risk of Fraud of China's State Owned Enterprises," Business and Economic Research, Macrothink Institute, vol. 4(2), pages 172-185, December.
    3. Ines Amara & Anis Ben Amar & Anis Jarboui, 2013. "Detection of Fraud in Financial Statements: French Companies as a Case Study," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 40-51, July.
    4. V.U. Imagbe & T.O. Abiloro & G.A. Saheed, 2019. "Fraud Diamond and Financial Crimes in Nigerian Banking Industries," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(4), pages 294-303, October.

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