The results from this study support the notion that enhanced governance practices,
especially independent boards and committees, effective management compensation,
and powerful shareholders are important in constraining management from managing
earnings and in ensuring a higher quality of earnings. Given the increasing interest in
corporate governance, the evidence provides additional support of continuing
regulatory initiatives throughout much of the world on corporate governance
concerning the board independence and managerial ownership. It also calls for more
actively involved shareholders to play a greater role in firms’ accounting reporting
processes.