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Sample Report

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Earning Management

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TABLE OF CONTENTS

1. INTRODUCTION .......................................................................................................................3

1.1 Rationale of study .................................................................................................................3

1.2 Scope of present investigation ..............................................................................................4

1.2 Research Aim .........................................................................................................................4

1.3 Research Objectives .............................................................................................................4

1.4 Researcher Questions ...........................................................................................................4

2. LITERATURE REVIEW ............................................................................................................5

2.1 Earning management .............................................................................................................5

2.2 Corporate governance variables and their relationship with earning management ...............6

2.3 Evaluating the relationship between earning management and different business operations9

3. RESEARCH METHODOLOGY ...........................................................................................10

3.1 Research type .....................................................................................................................10

2.2 Research design ..................................................................................................................11

2.3 Research philosophy ............................................................................................................11

2.4 Research approach ...............................................................................................................12

2.5 Data collection method ........................................................................................................12

2.6 Sampling approach...............................................................................................................13

2.7 Data analysis ........................................................................................................................14

2.8 Ethical consideration ............................................................................................................14

2.9 Limitation of study ...............................................................................................................15

4. EXPECTED OUTCOMES ......................................................................................................15

REFERENCES ..............................................................................................................................17

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1. INTRODUCTION

1.1 Title of study

Impact of earning management on corporate governance based on FTSE100 UK companies

1.2 Background

In the modern era, every organization makes efforts in order to present a distinct image

with the help of high profitability and earning capacity. This element plays an important role for

influencing the market value of share along with the goodwill of company in front of

shareholders, investors and other individuals of the firm. In this process, earning management is

identified as one of the most crucial and effective tools which are used by the management of

different companies for enhancing the market value through which organization would generate

good returns during initial public offering. In addition to that, by showing high profitability,

business entity can assess the support of different investors and banks. During business

expansion and mergers (Beiner, Drobetz, Schmid and Zimmermann, 2006). Apart from that, it

has been evaluated that this approach has found to be very effective to increase the profitability

of company but unethical manipulation of financial data leads to negative impact on the

corporate image of company. In this process, different aspects of corporate governance such as

composition of broad of director, audit committee and compensation of managers are playing an

important role in earning management practice. In this regard, present study will be carried out to

assess the impact of earning management on corporate governance. In this process, investigator

will consider the business operations of InterContinental Hotels Group PLC (IHG) (Corporate

Governance and Corporate Performance: UK FTSE 350 Companies, 2010). It is one of the

leading UK based hospitality groups that is managing different operations in all over the world.

The InterContinental Hotels Group PLC is considered as one of the FTSE100 UK companies.

1.3 Rationale of study

As per the change in business environment and market trends, the management of every

organization takes a wide range of decisions associated with fund raising, expansion of business

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as well as mergers and acquisition. In this process, financial results of an organization such as

income, growth and profit are playing an important role for assessing the support of investors,

banks and other stakeholders. Therefore, big companies like InterContinental Hotels Group PLC

manipulate accounting and financial data to assess the support of different stakeholders by

promoting higher profit as compared to actual profit (Agrawal and Chadha, 2005). Therefore, the

present report will address the impact of earning management on corporate governance within

FTSE100 companies. Therefore, InterContinental Hotels Group PLC will be considered by

researcher for handling different aspects of business management. In this process, “earning

management” will be considered an independent variable and “corporate governance practices”

will be termed dependent variable through which research will be able to generate appropriate

outcomes. In this process, the present research will enhance the understanding of researcher

about positive and negative impact of earning management. It will analyze the situation in which

alternation of financial data within an organization for personal and business motive will be

considered as unethical practices (Carney, 2005). Apart from that, the rationale behind selection

of present topic is increasing understanding of different aspects of corporate governance and

their relation with the profit manipulation practices through which management of IHG is able to

generate good returns.

1.4 Scope of present investigation

In the present research, investigator is going to evaluate the impact of earning

management on corporate governance with reference to business operations of InterContinental

Hotels Group PLC. The present research will examine different aspects that are associated with

the earning management practices within hospitality organization. It will provide information

about the impact of earning management on corporate governance structure that include board of

directors, audit committee, institutional shareholding, etc. (Brown and Caylor, 2006). The

present research will increase understanding of researcher about different aspects of corporate

governance through which an organization is able to control the profit manipulation practices.

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The present research will provide a wide range of data about positive and negative outcomes of

profit manipulation during business expansion and mergers.

1.5 Research Aim

The purpose of present study is “To assess the impact of earning management on

corporate governance: A Study on InterContinental Hotels Group PLC”.

1.7 Research Objectives

To analyse the earning management trends of last 10 years for IHG.

To assess the importance of earning management within an organization.

To evaluate different norms of corporate governance that is adopted by IHG.

To assess the relationship between earning management and corporate governance.

To examine the implication of imbalance between manipulation of financial results and

corporate governance.

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To suggest appropriate strategies to management for controlling earning management

operations

1.4 Research Questions

1. What are the last 10 years trends in earning management associated with IHG?

2. How earning management is important for business entity?

3. What are the different norms of corporate governance that are adopted by IHG?

4. How does earning management influence corporate governance practices?

2. LITERATURE REVIEW

2.1 Earning management

As per the research of Aguilera and Rupp (2006), it has been evaluated that earnings

management is identified as one of the most crucial concepts which are used by different

companies for altering different kinds of financial information. The management of an

organization uses this approach either to mislead investors about the economic status of a firm or

to gain some contractual benefits. The approach is mainly adopted by big companies for

attainment of different business objectives such as enhance reputation of company in the share

market, increase in market value of shares. As per the different studies, the concept of earning

management is mainly addressed in FTSE100 companies. This approach is depending largely

on accounting numbers. Author further argued that accruals are the most important earnings

management instruments which are adopted by different managers of top companies to either

increase or decrease reported income. In this context, the study of shbaugh-Skaife, Collins and

LaFond (2006) has found that this approach is considered as an attempt to enhance the

shareholders’ value and to maximize executive’s compensation with the help of income

smoothing and earnings management respectively so that management would be able to change

the market position of company. As per the findings of research of Enriques and Volpin (2007)

author further encompassed that this approach is acted as a motivation to increase the manager's

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compensation and job security to avoid the violation of debt covenants along with the reduction

in regulatory costs or to increase the regulatory benefit.

In this duration, Dittmar and Mahrt-Smith (2007) has examined that the income

smoothing or earning management is greatly influenced by several factors. In this regard, capital

market motivation is identified as the most important element which is having a significant

impact on different business operations that are associated with capital market such as initial

public offerings, seasoned equity offerings, management buoyant plans, etc. Therefore, it can be

stated that if management presents a good image of company through changing accounting

figures, firm would gain significant benefits in the stock market. The investigation of Bhagat and

Bolton (2008) that have been carried in next year of previous article has evaluated that contracts

motivation such as management compensation, debt agreement or job security has been acted as

an incentive for earnings management. Author further evaluated that different laws and

regulations such as import regulation, industrial regulation, antitrust laws, etc. are acting as an

incentive for the management.




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As per the research of Bebchuk, Cohen and Ferrell (2009), it is examined that managers

apply discretionary accruals as a motivation for options that are having a significant impact on

the stock prices that enhance the managers’ wealth through restricted stock compensation.

2.2 Corporate governance variables and their relationship with earning management

As per the research of Farber (2005), corporate governance is identified as the most

important factor which is having a direct impact on different aspects of business management. It

also plays an important role for ensuring the quality of financial reporting process. Apart from

that it plays important role for managing different activities associated with the earning

management. In this process, the management considers various variables such as board

composition, institutional shareholding; audit committee and executive compensation along with

their proxies that are presented in different aspects of management accounting (Carney, 2005).

As per the research of Agrawal and Chadha (2005), it is evaluated that the importance of

Audit Committee is measured by the audit governance score that is influenced by several

characteristics such as audit committee size, audit committee independence and board meetings.

Author further examined that governance score that is associated with audit committee is having

a crucial role for measuring the overall strength of the board. In this context, Beiner, Drobetz,

Schmid and Zimmermann (2006) have observed that a larger size of audit committee with an

increased organizational status and power that is delegated by the board of directors or top

authorities is going to be recognized as an authoritative body of business entity by the

management and external and internal auditors. On the other hand, it has evaluated that the audit

committee independence has a positive relationship with the contents and information that has

been gained by financial reporting. The use of discretion and various other elements to manage

earnings is directly associated with the audit independence along with their dependence on

different course of actions which have been selected by audit committee.

In this ear, As per the investigation of Brown and Caylor (2006), it has been examined

that audit the number of committee meetings within an organization represents effectiveness of

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the monitory role of board. Furthermore, these meetings provide a significant assistance for

analysing the effectiveness of audit committee. The research of Ashbaugh-Skaife, Collins and

LaFond (2006) has found that audit committee plays a vital role in monitoring management in

order to protect the shareholders’ interest. It is also responsible for carrying out systematic

evaluation about the integrity of financial reporting along with the independence and objectivity

of external auditors. In this context, it has evaluated that integration of various elements such as

composition and independence, audit committee meetings, financial expertise of committee

members, etc. greatly influenced the effectiveness and outcomes of financial reporting. Further,

Gillan (2006) has observed that more attention has been given to financial expertise as a

construct of board competence. The result of different studies on the relationship between audit

committee and opportunistic accounting is that of determined roles of board and audit committee

on earnings management practices.




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As per the research of Gillan (2006), it has been evaluated that the Board Composition is

identified as one of the most crucial aspects of corporate governance that have a significant

impact on the business decision making along with the approach of management related to

earning management. The concept of board composition is to determine the ratio of independent

outside directors to total board size that have a significant impact on the management decisions

along with the accounting operations and profitability management. Board size is viewed as an

important element of board characteristics that may affect the earnings management (Abdul

Rahman and Ali, 2006). Moreover, The findings of the research of Enriques and Volpin (2007)

have indicated that larger board size might be less effective in monitoring the management

activities. Author further argued that larger board members facilitate more advantages and

benefits for their companies by sharing alternative experience which might decrease the

incidence of earnings management. In addition to that, some other studies have used board size

as a determinant of earnings management so that it can be examined that the influence of board

size has received mixed results that are based on corporate governance and earning management.

In addition to that the research of Larcker, Richardson and Tuna (2007) has evaluated

that the relation between board composition and firm performance has found that the efficiency

of CEO monitoring mechanism between inside and outside directors is having a significant

impact on the business operations. Author further argued that outside directors play an important

role in monitoring CEO. Therefore, it can be stated that boards of different companies that are

dominated by outside directors can significantly constrain the opportunistic attitude of managers

for managing different tasks that are associated with the value maximization objective of firm. In

another context, Dittmar and Mahrt-Smith (2007) have examined that the impact of corporate

governance and pay-for-performance on earnings management is mainly associated with the

presence of independent outside directors that reduce the earnings management.

Apart from that, Enriques and Volpin (2007) have evaluated that institutional

shareholding is determined as an important aspect of corporate governance which is considered

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as per the ratio of equity shares of the firm which is held by institutional investors to the total

shares outstanding. In this regard, Richardson and Tuna (2007) have evaluated that institutional

shareholders have both the incentive and power to influence the operations and decisions of

managers. Therefore, managers have to act in consonant with value maximization objective of

the firm. Author further argued that institutional ownership has been emerged as an important

tool for protecting the minority interest within business entity and decision making process. The

reason behind this situation is that the large institutions are having various opportunities as well

as resources along with the significant ability to restrain the manager’s behaviour and their

activities. The study of Bhagat and Bolton (2008) has found that the institutional investors

represent ownership concentration in some cases as they have the ability to make bulk purchases

of company’s equity shares. Therefore, it can be stated that institutional shareholding is

positively related with the firm’s performance and having appropriate authorities for influencing

the management practices related to earnings management. In addition to that, the interaction

between institutional shareholding and earnings management has explored the influence of

different aspects of corporate governance such as governance structure and incentive-based

compensation that are having a great influence on firm's performance along with different

adjustments that are made for earnings management.

In the year of 2008, Bhagat and Bolton (2008) have described that executive

compensation is the nature log of cash compensation plays an important role in earning

management practices and corporate governance factors . The study has paid extra attention on

cash compensation rather than stock and stock options because only some companies are

disclosing this information. Therefore, the research of Bebchuk, Cohen and Ferrell (2009) has

focused on the total cash compensation which is examined by evaluating the cash and bonus

salaries. In addition to that, agency theory has found to be very effective for curbing the agency

cost that arises due to conflict of interests between owners (shareholders) and controllers

(managers). Apart form that it is examined that the reduction in agency cost is mainly associated

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with the executive compensation that is evaluated as a settlement to the manager for the

commitment towards success of the firm. This settlement could be made either by using cash

compensation or stock options (bonus plan) or a combination of both element (Abed, Al-Attar

and Suwaidan, 2012). For attainment of the objective of shareholders’ wealth maximization by

covering the interest of managers, organization has to establish a proper balance between

executive compensation along with the firm's performance.

2.3 Evaluating the relationship between earning management and different business operations

As per the research of Farber (2005), it has found that the relationship between Earnings

Management and Resource Allocation has played an important role for analysing different

aspects that are associated with the properties of accounting information and investment

decisions. Author has argued that only a small part of the earnings management has been

addressed by different researchers that are mainly associated with the consequences of earnings

management or resource allocation on financial outcomes. In this context, the study of Gillan

(2006) has concluded that earnings management plays an important role during IPO mispricing.

Furthermore, it has examined that long term returns related with IPOs are mainly similar to those




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of seasoned firms that are having similar market capitalizatism. As per the investigation of

Brown and Caylor (2006), it has found that company would face adverse market reaction during

disclosure of misleading reporting. This approach is also indicating that investors were not

completely aware of the manipulation of financial reports along with the profitability of

company.

Beiner, Drobetz, Schmid and Zimmermann (2006) have predicted that inefficient

investment projects will more likely to be undertaken by companies with the help of misreported

financial statement. In additional to that, companies are overstating their financial results through

which they will be able to obtain cheaper financing for the accomplishment of different

requirements of projects. Author further has addressed that misreporting firms are always trying

to over-invest in R & D and stock financed merger along with the acquisition that provides

significant assistance for lowering the risk on investment along with the generation of good

returns. Apart from that, The investigation of Aguilera and Rupp (2006) has examined and

derived different aspects associated with the Earnings Quality and Investment Decisions. On the

basis of these elements, author has stated that better accounting information has found to be very

effective in order to reduce the information imbalance that has been addressed between managers

and outside suppliers of capital. It plays an important role for allowing more investment as per

the distinct requirement of business. As per the investigation of Enriques and Volpin (2007), it

has been found that different measures of accounting quality are negatively associated with the

investment-cash-flow sensitivities which are indicating that the impact of financing

confinement on investment is lower for such organization that have managed high quality in

different accounting practise accounting quality.

In the year of 2007, Richardson and Tuna (2007) has evaluated the impact of research

and development (R & D) spending for the attainment of earnings targets and has found that

whether this approach is influenced by the composition of firm's institutional investors or not.

Author further argued that Earnings Management and Investment Decisions both are interrelated

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factors. In this regard, it is examined that an organization which is targeted by SEC enforcement

actions always makes efforts to attract the external financing at a certain cost (Richardson and

Tuna, 2007). Therefore, it can be stated that this approach is identified as an important

motivation for managing different practices that are associated with the earning manipulation.

The research of Dittmar and Abed, Al-Attar and Suwaidan that has been carried out in

2012 has addressed that accruals quality is significantly negatively associated with both over

investment and under investment. Some other studies have determined that the timely accounting

recognition of different economic losses influence the managers in order to avoid such projects

that can hamper the performance and outcomes of company (Earnings Management and

Corporate Governance, 2013).

3. RESEARCH METHODOLOGY

The research methodology is termed as the most important and basic framework in which

researcher will be able manage various tools and operations of particular investigation. In the

context of present study, the success of research will be greatly influenced by an appropriate

research methodology (Coolican, 2009). As per nature of present investigation, researcher will

consider different aspects of research framework that are evaluated under this statement:

3.1 Research type

The selection of research method is carried out with an appropriate evaluation of the aim

and nature of the study. Therefore, wide range of research method are available for investigator

through which researcher will be able to control different aspects of investigation by applying

either qualitative research type or quantitative type (Merriam, 2009). As per the detail evaluation

of the aim and objectives of present study, researcher will adopt the quantitative method of

investigation through which researcher will be able to examine a variety of information and

statistics and facts associated with the profitability of InterContinental Hotels Group PLC for

evaluating different aspects of earning management. The present research work will be carried

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out to assess the impact of earning management on corporate governance with reference to

business operations of InterContinental Hotels Group PLC. Quantitative method of research will

be very effective in the present investigation for enhancing understanding about different norms

of earning management and their implication on the business accounting (McBurney and White,

2009). The approach will be found very effective in evaluation of last 10 years trends associated

with earning management practices along with the profitability of company. On the other hand,

qualitative method of research will not be appropriate in the present research work. This is

because this tool will facilitate good results when researcher wants to examine human behaviour

etc. It will provide significant support in evaluating the theoretical data.

2.2 Research design

The research design is playing crucial role in research methodology through which

researcher will be able to handle various aspects of research with reference to goals of

investigation. There are several types of research designs identified by researcher through which

researcher will be able to generate appropriate results as per nature of the investigation. By

considering the nature of investigation, investigator will select most important research design

from different research design such as descriptive, exploratory and casual- comparative (Sivia




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and Skilling, 2006). With reference to objectives of present study, exploratory research design is

the most suitable approach for current research that will assist the researcher in examining

different facts, evidences along with the financial data of InterContinental Hotels Group PLC. It

will support researcher in handling different aspects of corporate governance and earning

management. In the context of present investigation, exploratory research will be identified as a

great tool for evaluation of various concepts related to earning management. In the contrary,

descriptive research will not be reliable for carrying out detail evaluation of statistical

information related to financial statements of hospitality firm. In addition to that, exploratory

research design will provide significant support to investigator for analyzing information about

corporate governance and accounting practices that have been adopted by the company in order

to carry out earning management (Panneerselvam, 2004). Apart from that, descriptive analysis

will not be useful for analyzing different kinds associated with present study and handling of

various other operations of business. This is because descriptive evaluation will be useful for

evaluating theoretical data and if study is associated with the human nature and behavioural

aspects.

2.3 Research philosophy

Research philosophy is defined as a ideology in which researcher will present his

perception towards several operations and activities of research as per the objectives and goals of

investigation for assessing accurate and appropriate research outcomes. In this regard, there are

two types of research philosophies available for researcher to present investigation that includes

interpretivsim and positivism philosophies (Khanzode, 2004). By applying appropriate research

philosophies, investigator will be able to handle different aspects of study as per nature of the

investigation. In the context of present study, positivism research philosophy will be applied by

the researcher for managing different aspects and research operations through which researcher

will able to generate appropriate outcome according to some specific evidence along with

accounting information of IHG. This approach will be termed as a great tool to assess views of

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manager with reference to earning management and corporate governance (Merriam, 2009). In

the contrary, interpretivism philosophy will not be suitable in analyzing statistical data along

with accounting concept with reference to aim of current research work. Therefore, it can be

stated that positivism approach will provide significant assistance to the investigator for

assessing reliable research outcomes with reference to certain logic and concepts that are

associated with corporate governance and manipulation of financial information.

2.4 Research approach

By focusing on the goals of investigation, research will apply either inductive or

deductive research approach through which investigator will be able to control different aspects

of investigation as per the nature of present research work (Aaker, 2011). Therefore, researcher

will adopt the deductive research approach through which researcher will able to accomplish

goals of investigation associated with assessing the impact of earning management on corporate

governance with reference to business operations of InterContinental Hotels Group PLC. The

reason behind selecting deductive approach is that the present study will be carried out with the

help of wide range of historical data and figures which would be acquired from financial

statements of the company (Silverman, 2010). This approach will be found very effective in

evaluating profitability of the organization along with different business practices associated

with earning management for establishing of distinct image of the company in market. On the

other hand, inductive approach will not reliable in the context of present investigation. This is

because this approach will offer appropriate research by evaluating wide range of general

information. Therefore, it can be stated that inductive research will be suitable for analyzing

wide range of theoretical data as per the objectives of study.

2.5 Data collection method

An investigator considers different tools and tactics for collecting wide range of data and

information which plays important role in generating appropriate research outcomes with

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reference to aim and goals of study (PressSullivan, 2011). In this process, researcher mainly

considers primary, secondary and both sources of data. In the context of present research, the

investigator is going to assess effect of earning management on corporate governance within a

hospitality group, both primary and secondary sources of data collection will be considered by

the researcher for increasing appropriateness and accuracy of research outcomes. The primary

data collection method will be found very effective for collecting first hand information as per

the distinct requirement of investigation with the help of different tools such as survey,

questionnaire and interviews (Corbetta and et.al, 2008). All these tools would provide wide range

of data associated with earning management as per the views of different individuals within the

organization. Apart from that, secondary sources will be used by investigator for acquiring

different kinds of secondary data with the help of books, online websites and past studies along

with the annual reports of companies etc. In the present study, researcher will use all these tools

for collecting statistical data along with theoretical information as per the requirement of present

investigation. As per requirement of present research, researchers is going to use both primary

and secondary tools for gathering different kinds of information which investigator will use in

questionnaire for assessing perception of managers about earning management (Gibaldi, 2010).

The collection of primary data will be carried out with the help of questionnaire. In addition to

that, annual report of IHG and past studies will be adopted by the researcher for collecting wide

range of statistical data associated with income and profitability of the firm.

2.6 Sampling approach

In the present research work, investigator will be going to consider the primary sources of

data collection. Therefore, there are two types of sampling tools available for researcher that

consist of probabilistic sampling and non-probabilistic sampling. These approaches will be very

effective for selecting the most suitable sample as per the aim of present investigation. As per the

nature of present study, investigator will consider non-probabilistic sampling approach (Jackson,

2008). As per the non-probabilistic sampling approach, investigator will apply purposive

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sampling for selecting appropriate sampling size in the context of present study. On the other

hand, probabilistic sampling will not be appropriate for the present research work. This is

because probabilistic sampling provides significant assistance to researcher when researcher

wants to select an appropriate sample from large number of targeted population. Therefore, it

will not be reliable in the present investigation (Franklin, 2012). For the present research work,

researcher will take sample of 10 managers of InterContinental Hotels Group PLC by applying

purposive sampling approach. This tool will be found very effective for acquiring primary data

or firsthand information related to role of earning management within different business

operations of an organisation and its impact on corporate governance practices.

2.7 Data analysis

The accuracy and reliability of research outcomes and findings is greatly influenced by

different tools associated with evaluation of data which have been selected by the investigator.

As per the nature of present investigation, researcher will consider both primary as well as

secondary sources of data collection (Merriam, 2009). Therefore, it is essential for researcher in

order to select appropriative tools for evaluating range of primary data as well as financial

figures. In this process, investigator will apply thematic analysis along with different statistical




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tools such as SPSS for analyzing wide range of theoretical and statistical data as per the aim and

objectives. SPSS is a great tool for analysing statistical data such as sales data, growth rate etc

(McBurney and White, 2009). In addition to descriptive statistics will be used for development

of a summery of data that will be acquired from different sources. Apart from that there present

investigation will be carried out with reference to one independent and one dependent variable

the approach of regression is going to considered by researcher for assessment of accurate

outcomes. On the other hand, thematic analysis will assist the researcher in carrying out

systematic evaluation of views of managers in the context of earning management and corporate

governance.

2.8 Ethical consideration

In the present research work, investigator will consider various factors for managing the

research under ethical norms. In this process, researcher will use different tools associated with

safety of data through which investigator will be ensured about safety and security of

information. In addition to that, investigator will avoid sharing of personal and professional data

of managers working in IHG who will provide their views as per requirement of present study

(Panneerselvam, 2004). Apart from that, investigator will consider appropriate and reliable

sources for collecting variety of information associated with financial of IHG as well as earning

management practice of the company. All these practices will assist researcher for completing

different tasks and will also help in generating appropriate outcomes within the ethical

consideration.

2.9 Limitation of study

For handling various aspects associated with research operation, researcher would

address some issues and limitation while managing different business operations. In this regard,

researcher will face some issue during collection of primary data (Khanzode, 2004). This is

because; managers of IHG will not have appropriate information about the earning management

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affordable price.

practices along with their impact on business operations. This thing may delay the other research

operations and due to this the investigator would face some issues in collection of primary data.

In addition to that, limitation of time and other resources will lead negative impact on

effectiveness of data collection process. In the present research work, investigator will consider

secondary data such as financial figures of IHG and evaluation of secondary data will be carried

with the help of SPSS and other statistical software (Merriam, 2009). Therefore, researcher

would address some problems related to appropriateness of secondary data along with the

outcomes of the present investigation. In addition to that, Investigator will find some issues for

establishing appropriate coordination among various activities with reference to the research

plan.

4. EXPECTED OUTCOMES

The present research will be scheduled to assess impact of earning management and

corporate governance with reference to business operations of InterContinental Hotels Group

PLC. In this process, researcher will consider both primary and secondary sources of

information. As per the information collected from different sources, researcher would find that

earning management is identified as the most common tool which is used by each organization

listed in stock market or opening overseas business operation. Further, evaluation of various

facts would identify the manipulation of income and earnings of company in different accounting

reports which play important role to attract new investigator and increases the value of shares in

the market. This would create direct impact on corporate image and market value of the

company.

The present research would address that earning management practices within a

hospitality organization also affect the corporate governance structure that include board of

directors, audit committee, institutional shareholding etc. By considering accounting data of

InterContinental Hotels Group PLC, the researcher could identify the impact of earning

management on profitability of the company and financial figures such as revenue and profit.

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affordable price.

The present research will increase understanding of researcher about different aspect of corporate

governance and their impact of earning manipulation practices. In this regard, the present study

will address broad composition which states that internal and external broad member is having

direct impact of earning manipulation operation. This is because if number of external director is

higher than internal director than external directors always try to control earning management

practices for protecting the interest of shareholders or vice-versa. The present research will

increase understanding of positive and negative outcomes of profit manipulation which is carried

out by manipulation of financial outcomes in the accounting reports.




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23

REFERENCES

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Earnings Management and Corporate Governance. 2013. [Pdf.]. Available through:

<http://www.iiste.org/Journals/index.php/RJFA/article/viewFile/4961/5044> [Accessed on

25th

December 2015].

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