• Corpus ID: 55060640

Earnings management, corporate governance, and auditor’s opinions: a financial distress prediction model

@article{Hsiao2017EarningsMC,
  title={Earnings management, corporate governance, and auditor’s opinions: a financial distress prediction model},
  author={Hsiao-Fen Hsiao and Szu-Hsien Lin and Ai-Chi Hsu},
  journal={Investment management \& financial innovations},
  year={2017},
  volume={7}
}

• Hsiao-Fen Hsiao, Szu-Hsien Lin, Ai-Chi Hsu
• Published 26 March 2017
• Business
• Investment management & financial innovations

This study sets out to examine three issues: whether financially distressed firms are more likely to manipulate their earnings, whether the board of directors of these firms has a low level of independence, and whether the opinion of their auditors reflects the possibility of financial distress. This study uses a dataset of listed and de-listed firms from 1997 to 2007 to examine various factors and conditions before a firm’s financial distress, including the variables of earnings management, corporate governance, and audit opinions. This study is unique in its combination of these three variables to build a financial distress prediction model, which is used to verify whether financial distress has occurred in a firm recently. The prediction model may help countries or firms to predict and prevent the likelihood of a financial distress.