The impact of board and ownership structures on accrual quality, discretionary accrual quality, discretionary accruals, firm risks, financial performance & growth opportunities

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The impact of board and ownership structures on accrual quality, discretionary accrual quality, discretionary accruals, firm risks, financial performance & growth opportunities

 

Author: Chu, Siu-chung
Title: The impact of board and ownership structures on accrual quality, discretionary accrual quality, discretionary accruals, firm risks, financial performance & growth opportunities
Degree: D.Acc.
Year: 2007
Subject: Hong Kong Polytechnic University -- Dissertations.
Accrual basis accounting.
Corporations -- Accounting -- Effect of corporate governance on.
Department: Graduate School of Business
Pages: vi, 358 leaves ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2199003
URI: http://theses.lib.polyu.edu.hk/handle/200/2287
Abstract: This study tries to investigate the impact of board and ownership structures on accrual quality (AQ), discretionary accrual quality (DAQ), discretionary accruals (DA), firm risks, financial performance and growth opportunities by using Hong Kong data. Board and ownership structures are factors of Corporate Governance (CG), which will be evaluated by subdivisions of board of directors, audit committee, substantial ownership, CEO shareholdings and Non-CEO shareholdings. All these are to examine the effect of each variable of CG over the AQ, DAQ, DA, firm risks, financial performance, and growth opportunities to see whether I can find any existence of monitoring effects, entrenchment effects and / or any incentive effects. To facilitate easier and more meaningful analysis, two different methods of analysis, namely the univariate analysis and the multivariate analysis were carried out to generate better insights on any correlations that exist. The former involves statistic analysis of the T-test and Non-Parametric Wilcoxon Rank Sum Test while the latter are regressions carried out firstly using assigned main independent variables and the again with additional control variables of firm risk and growth opportunities. In general, the results of univariate analysis are better than the results of multivariate analysis where most of it are insignificant and are mixed results. Even though the results are weakly supported, I can conclude that the AQ, DAQ, DA and firm performance will be better off with the existence of monitoring effects. On the other hand, the AQ, DAQ, DA and firm performance will be better or worse with the existence of entrenchment effects. It depends on the degree of alignment of interests of insiders with the company. If the interests of insiders are in congruence with the whole company, investors and shareholders, then the AQ, DAQ, DA and firm performance will be better. Otherwise, it will be worse. The limitations of my study are small sample size and volatility of firm performance during the sample periods of year 2000 to year 2004 in Hong Kong. For that period, Hong Kong economy was still recovering slowly from the Economic Crisis in 1997. However, the recovering economy suffered setback once again upon the sudden outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003. This accounts for why some of the predicted results are not observed from the analysis and instead are some surprising and pondering observations.

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