Corporate governance mechanisms and accounting information quality of listed firms in Ghana

Abstract

This paper analyses the implications of internal corporate governance mechanisms for accounting information quality which uses discretionary accrual as a proxy. The empirical research is based on a sample of 20 non-financial institutions listed on the Ghana stock exchange (GSE) for an 11-year period, 2003 to 2013. The results show that the operational earnings are more persistent than operational cash flow which suggests that in predicting future values from current ones, operational earnings gives a better output in looking at the long-term sustainability aim of a firm, than operational cash flows. The results also suggest that the board independence and foreign ownership constraint opportunistic managers to manipulate the earnings leading to a higher level of accounting information quality. By extension, these results have important policy implications for regulators in assessing the effectiveness of corporate governance on earnings quality.

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