Kauppakorkeakoulun julkaisuportaali
Aalto-yliopiston kauppakorkeakoulun gradujen tiedot nyt Aaltodocissa: Aaltodoc-julkaisuarkisto
Kauppakorkeakoulu | Laskentatoimen ja rahoituksen laitos | Laskentatoimi | 2010
Tutkielman numero: 12317
The Interplay between Internal Governance Structures, Audit Fees and Earnings Management in Finnish Listed Companies
Tekijä: Ratsula, Olli-Pekka
Otsikko: The Interplay between Internal Governance Structures, Audit Fees and Earnings Management in Finnish Listed Companies
Vuosi: 2010  Kieli: eng
Laitos: Laskentatoimen ja rahoituksen laitos
Aine: Laskentatoimi
Asiasanat: laskentatoimi; accounting; pörssiyhtiöt; exchange-listed companies; tilintarkastus; auditing; corporate governance; corporate governance
Sivumäärä: 111
» hse_ethesis_12317.pdf pdf  koko: 2 MB (1923840)
Avainsanat: auditing; tilintarkastus; earnings management; tuloksen ohjaus; corporate governance; corporate governance; endogeneity; endogeenisuus
PURPOSE OF THE STUDY The main purpose of this thesis is to examine the joint effects of the internal corporate governance structures, audit fees and earnings management in Finnish listed companies. More precisely, the thesis examines the effects of the existence internal governance structures firstly to the audit fees and secondly to the magnitude of earnings management. The connective factor between the two presented research directions is financial reporting quality. The secondary purpose of this thesis is to explore the endogeneity issues raised in the previous literature and the methods for alleviating this problem.

DATA The data employed in this study is mainly sourced from Thomson Financial and Orbis databases. Also, the audit fee and governance related data is handpicked from the financial statements of the sample companies. Earnings management was proxied by the modified Jones cash flow discretionary accruals. The sample consists of companies listed in OMX-Helsinki, whose fiscal year ended in the year 2008. The financial companies were excluded from the sample, which has 107 observations in total.

METHODS The quantitative methods used in this study to analyse the hypothesized effects are performed using multivariate OLS and 2SLS regressions with the Stata statistic program. The 2SLS regressions performed were also tested extensively for the validity and powerfulness of the used instrumental variables. The validness of the instrumental variables was also tested separately for each variable.

RESULTS The results of this thesis support the complementary view between the existence of the audit committee and the amount of audit fees. Also, there is evidence that the auditors are most efficient in constraining earnings management. No statistically significant support for the association of the internal audit was found. These results are fairly robust when controlling for endogeneity between the hypotheses variables. However, the IV models do suffer from weak instrumental variables, which can skew the results. The robustness of the results were also confirmed by using alternative measures for earnings management, audit fees and internal audit. The additional analyses provide some evidence on the positive effect of the earnings management to the audit fees, when the earnings management was measured with the last quarter earnings reversal.
Verkkojulkaisut ovat tekijänoikeuden alaista aineistoa. Teokset ovat vapaasti luettavissa ja tulostettavissa henkilökohtaista käyttöä varten. Aineiston käyttö kaupallisiin tarkoituksiin on kielletty.