A Review on the Influence of Corporate Governance Mechanism on Earnings Quality of Banks

Corporate governance mechanisms play significant roles in protecting the rights of stakeholders especially in assuring that the stakeholders get the reliable and relevant financial information regarding the performance of the banks. Effective corporate governance mechanism is important in ensuring high quality of financial reporting. This paper focuses on the earnings quality as a measure of financial reporting quality in the context of banking industry and its relation with the corporate governance mechanisms. This paper highlights the relationship between board of directors (board size and board independence), audit committee (audit committee size and audit committee independence) and external auditor and earnings quality. The findings of previous literature, however, still inconclusive, and this paper serves as preliminary study for future study.