The effects of corporate government structures on accrual based earnings management: An application on BIST

The main objective of this study is to evaluate the potential impacts of corporate governance structures on earnings management practices in Turkey. The hypotheses identified in the study were analyzed by using Ordinary Least Squares (OLS) analysis method with industry and time dimension and developed analytical model; it was tested using a sample of 1,064 firm*year data of 194 publicly traded companies listed on Borsa Istanbul (BIST) between 2012-2017. In this thesis, all analyzes are performed using Stata/15.1 package program. For this purpose, in the application part of the thesis, first of all, accruals which represent the existence of earnings management applications are calculated based on total accruals. In the literature on measuring earnings management practices, Kothari et al. (2005), absolute value of the discretionary accruals obtained from a cross-sectional industry based accrual model adjusted for performance. As a result of the analysis; it is ascertained that corporate governance structures that increase earnings management practices in firms are; the CEO Duality, is the occupation of both the chairman and the Chief Executive Officer (CEO) positions by the same person and although the audit quality and the share of managerial (executive) ownership are insignificant. Corporate governance structures that reduce earnings management practices are the size of the board of directors, the independence of the board of directors, and although institutional ownership ratio is insignificant. In order to prevent gain management practices in firms, it is important to increase the number of independent members in the board of directors and audit committee and to increase the quality of corporate governance such as the separation of the chairman and the executive chairman/general manager.