Earnings Management

Powerful Essays
Topics: Dividend, Cash flow
European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 4, No.1, 2012

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Earning Management and Dividend Policy: Empirical evidence from Pakistani listed companies
Jahanzaib Haider (Corresponding author) Bahaudin Zakariya University, Multan Sub-Campus, Dera Ghazi Khan, Pakistan. Tel: 92-331-3312626, E-mail: haider_jahanzeb@yahoo.com Akbar Ali Bahaudin Zakariya University, Multan, Sub-Campus, Dera Ghazi Khan, Pakistan. Tel: 92-331-7304678, E-mail: baloch271@gmail.com

Tahira Sadiq Nust Business School, Islamabad, Pakistan. E-mail: tahiraasadiq@gmail.com

Abstract: The study is an effort to find out the impact of earning management on dividend policy in Pakistan. A set of listed companies from Karachi stock exchange (KSE) 100 indexes have been investigated to analyze the relationship from the year 2005 to 2009 in Pakistan. Dividend policy has been measured by dividend payout whereas earning management has been quantified by discretionary accruals and discretionary accrual is used as a proxy to determine earning management. Modified cross sectional model (1995) has been used to measure discretionary accruals. Regression analysis shows that earning management has impact on dividend policy that rejects our null hypothesis. But coefficient shows that the relationship is so weak that is near to no relationship. Reason behind this no impact is economic decline period, because earning management changes every year. In the decline period our earning management was increase and the companies starts downsizing divided payment. Key words: Dividend Policy, Earning Management, Karachi Stock Exchange.

1.

Introduction:

Earning management and dividend policy is among the popular topics discussed in today’s modern business. In modern businesses it is duty of the manager to make a number of decisions about the finance of the corporation. It is an important decision that the manager must come across the firm earning management and



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Wolfgang, Murtagh and Iona (2003), “Dividend policy of bank initial public offerings”, Justusliebig university Giessen, Germany Yiu Man leng (2006), “Analysis of determinants of dividend policy in UK”. Presented for consideration for degree of MA Finance. Yoshida, Kato and Kunimura (2002), “Dividend behavior and Pure accrual Management of Japanese banks”, faculty of information management Osaka University of Economics Japan. Zulfiqar, Hui and Nousheen (2010) “Earning Management and dividend policy an empirical comparison between Pakistani listed companies & Chinese listed companies”, International research journals of finance & economics, 14450-2887 Issue 35. Zulfiqar, Safdar and Arshad (2009), “Corporate governance and earning management and empirical evidence from Pakistan listed companies”, European journal of scientific research, Vol.26. No.4, pp 624-638. 90 This academic article was published by The International Institute for Science, Technology and Education (IISTE). The IISTE is a pioneer in the Open Access Publishing service based in the U.S. and Europe. The aim of the institute is Accelerating Global Knowledge Sharing. More information about the publisher can be found in the IISTE’s homepage: http://www.iiste.org The IISTE is currently hosting more than 30 peer-reviewed academic journals and collaborating with academic institutions around the world. Prospective authors of IISTE journals can find the submission instruction on the following page: http://www.iiste.org/Journals/ The IISTE editorial team promises to the review and publish all the qualified submissions in a fast manner. All the journals articles are available online to the readers all over the world without financial, legal, or technical barriers other than those inseparable from gaining access to the internet itself. Printed version of the journals is also available upon request of readers and authors. 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