Abstract:
Earning Management is the very important indicator to any organization as some
managers manipulate earnings and the financial statements do not present according
to the true and fair value. This Study objective is to analysis the relationship between
corporate governance and earning management in listed manufacturing companies in
Sri Lanka. C.E.O Duality (CD), Board Independence (BDIN), Board Members with
Financial Expertise (BDFX), Number of Board Meeting (BDMEET), Board Size
(BDSIZE) used as the Main indicator of Corporate governance and Firm Size (SIZE)
and Return on Asset (ROA) used as control variables. Then, Discretionary Accrual
(DA) is applied as the Earning Management indicator. The study used secondary data
of all Manufacturing Company from 2013 to 2017. Data were analyzed using
regression analysis and E-Views packages. The findings of the study showed that
CEO duality and board size are negatively and insignificantly associated with
earnings management. That depict firms which have two separate positions for Chief
Executive Officer and Chairman are more effective in reducing earning management
than firms which do not. Also, firms with large number of directors have lessor
amount of earnings management than firms with small board size
