Effect of Earnings Management linked Advertising Expenditures, Board Attributes and Ownership Type on Performance of Food Sector Firms of Pakistan

Authors

  • Mubashar Tanveer Department of Commerce University of Gujrat, Gujrat, Pakistan
  • Naveed Mushtaq Noon Business School University of Sargodha, Sargodha, Pakistan
  • Muhammad Zahid Awan Department of Business Administration Gomal University, D.I. Khan, Pakistan

DOI:

https://doi.org/10.2112/jbe.v12i2.254

Keywords:

Advertising Expenditures, Earnings Management, Board Characteristics, Ownership, Financial Performance, Pakistan

Abstract

The intention behind this paper was to identify the effects of earnings management linked to advertising expenditures, board attributes and ownership type on financial performance of firms. Fourteen firms were selected from the food sector of Pakistan. These firms were selected by considering the availability of data for the time period 2010-2019. Data is analyzed using fixed effects panel data regression. Results indicated a positive connection between earnings management linked advertising expenditures and financial performance. This finding demonstrates that managers manage earnings by means of structuring advertising expenditures. Moreover, financial performance of firms escalates with increase in level of earnings management activities. In respect of board attributes, a positive link is found between CEO duality and performance, which indicate that CEO duality augments firm performance. In respect of ownership type, a positive link is found among managerial ownership and performance, which signifies that corporations having high (low) proportion of managerial ownership perform better (worse). Likewise, a positive link is observed among institutional ownership and performance, which implies that corporations having high (low) proportion of institutional ownership performs better (worse). It is obvious from the results that earnings management are linked to advertising expenditure, CEO duality, institutional ownership and managerial ownership has a favorable impact on the performance of firms. Financial performance is one of the imperative factors considered by investors in decision making. This paper investigated the issue for food sectors firms of Pakistan. Thus, this topic can be studied for other firms of Pakistan.

Published

2021-01-27

How to Cite

Tanveer, M., Naveed Mushtaq, N. M., & Zahid Awan, M. (2021). Effect of Earnings Management linked Advertising Expenditures, Board Attributes and Ownership Type on Performance of Food Sector Firms of Pakistan. Journal of Business & Economics , 12(2), 67-81. https://doi.org/10.2112/jbe.v12i2.254