Correlation between the Presence of Accountants in the Board of Directors and Discretionary Accruals: The Case of Philippines

Angelito C. Descalzo, Stephany. Cabaccan, Jonathan Dob, Ralph Fermante, Christian Reyes, Adrian Simangan and Judy Ann Tuzon

This study examines how the presence of an accountant in the Board of Directors of a particular corporation is correlated to the discretionary accruals recognized in its financial statements. The discretionary accruals of the top twenty publicly listed firms in the Philippines from years 2009 to 2014 were calculated using the Healy and Modified Jones Models, and board compositions of the firms were evaluated and reviewed. Thereafter, a correlation analysis is applied to determine whether or not there is an association between the two variables. Results suggest that the amount of income-decreasing discretionary accruals and total discretionary accruals are negatively correlated to the percentage of accountants in the board, while there is no correlation between the percentage of accountants in the board and income-increasing discretionary accruals recognized in the financial statements.

DOI : https://doi.org/10.21102/graf.2017.03.81.07