Corporate Governance and Earnings Management: Empirical Evidence from Mauritian Listed Companies

The study examines the association between corporate governance and earnings management and also investigates the impact on the behavior of earnings management in the presence of corporate governance practices along with the activities of the board and the audit committee by measuring the level of discretionary accruals. The Modified Cross Sectional Jones Model is used to measure discretionary accruals whereas data about the characteristics of audit committee and board of directors have been collected from annual reports of listed companies of Mauritius. Findings reveal that firms having lowest discretionary accruals have better audit committee characteristics, moreover it is observed that where companies have more than two meetings the committee is more likely to be composed of independent directors and their members have sound financial expertise.