The profit management approach of publicly traded companies and Corporate governance

In the global world, financial reports are ever more important. The financial crisis that was fueled by the Enron Case, reduced confidence in financial statements. The managers of the firm can manipulate earnings to pursue their own interests. Therefore, various sanctions have been developed to prevent financial misrepresentation and manipulation all over the world. In this context, such sanctions are adopted in Turkey and all over the world. The most important of these is the SPK (the Capital Market Board of Turkey) Corporate Governance Principles. Based on the expectation that companies adhering to these principles will increase their confidence in financial reports, an interesting research question is whether adoption of corporate governance principles affect earnings management. To answer this question, in this study, data for the period 2008-2018 for 150 companies operating in various sectors of the Istanbul Stock Exchange have is collected and tested with panel data analysis using 4 different discretionary accrual models. After collecting a number of variables to proxy for the corporate governance environment of each of the companies inclueded in sample, their bearing on corporate earnings management is tested using multivariate linear regression analysis. Results show that, board size, number of independent board members, free float rate, number of executive board members, existence of an audit committee, being audited by the Big4 and the existence of an early risk detection committee have an effect on corporate earnings management practices.