A Study of Corporate Governance Factors and Earnings Management Behaviors of Taiwan Public Companies
Dr. Torng-Her Lee, Dr. Catherina Ku, Haimin Chen, Jing-Fong Chen

Abstract
This study explores the impact of corporate governance factors to earnings management behaviors. The sample covers 268 publicly held corporations in Taiwan. We use modified Jones model to test the free cash flow, discretionary accrual items and some corporate governance factors. Our analysis shows that the discretionary accruals are positively related with free cash flow. The results also indicate that companies that have been audited by the Big-Four CPA firms have less discretionary accrual items. Debt to asset ratio has a negative relationship with discretionary accruals. Results from corporate governance factors indicate that the turnover rate of internal auditors, the number of financial report restatement and the number of earnings forecast are not significantly related with discretionary accrual items. Our analysis also shows different earnings management behaviors between high-tech and traditional industry.

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