Effects of the Board's Ownership and Oversight Structure And Audit Characteristics On Earning Management

Considering the financial problems around the world, using a regulatory approach in corporate governance and also enhancing audit quality in order to assure shareholders have an increasing importance now. Since shareholders rely on the financial data validated by auditors in order to make decisions, auditor's characteristics may affect managers' action of financial information manipulation. On the other hand, the Board structure may affect accounting method choice, specially earning management. This study is aimed to investigate effects of audit characteristics including audit tenure and audit firm size, as well as the board's ownership and oversight structure on earning management. The sample consists of 220 firms listed in Tehran Stock Exchange during 2009 to 2015. Findings indicate that there is a significant and direct relation between chief executive officer ownership and the earning management. Other results also show a positive significant relation between audit tenure and earning management. One of the interesting findings is that firms employing auditors with more than 5 to 10 partners and technical directors, has less earning management.