Following Beasley (1996), Dechow et al. (1996) intend to test the relationship.Between earnings management and companies' internal governance structures. The study.Selects 92 companies that violated US GAAP between 1982 and 1992 and compares,,Discretionary accruals (measured by Jones model) with 92 non-fraud, First companies.They find that the major incentive of earnings manipulation is to lower the cost of external.Financing. Second the principal, reason for managers' earnings management is the weak.Corporate governance mechanism. Third the independence, of board of directors and audit.Committee significantly dissuade earnings management. Dechow et al. (1996 study.)Earnings management through the contrastive analysis of fraud and non-fraud companies.However their findings, cannot be applied universally for the companies that have low.Level of external financing due to the extremely limited sample selected in their studies.4.1.3, Becker DeFond Jiambalvo and, Subramanyam (1998).
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