Internal Corporate Governance and Cash Flow Manipulation

• In Event: 4. Governance

Abstract

We empirically examine whether internal corporate governance mechanisms are effective in curbing cash flow manipulation. We find that corporate boards in India play an active role in curbing cash flow manipulation through real activities but fail to control cash flow manipulation through classification and timing. In addition, we find that these boards are ineffective in curbing any form of cash flow manipulation when firms face pressures to meet capital market expectations, need external financing, are in financial distress, or are complex.

Authors

• Neerav Nagar, Indian Institute of Management Ahmedabad

• Mehul Raithatha, Indian Institute of Management Indore