【正文】 al governance structures and the practice of earnings management in Australian firms is motivated by several factors. With The Exception of Peasnell et al.(2020),which uses data,existing research is predominantly US based. Therefore,we explore whether the internal governanceearnings management relationship holds in an institutional environmen where corporate governance is less regulated and choice of governance mechanisms is voluntary(VonNessen,2020). In Australia,at the time of the present study(2020),listed panies were not required to have an audit mittee or an internal audit function. Furthermore,corporate regulators favour principlesbased approach to governance rather than a rulesbased approach(ASX,2020). Although a similar approach exists in the UK,Peasnelletal.(2020)examine only the relationships between earnings management and the proportion of outside directors on the board and the existence of an audit mittee. We extend this research by exploring the effect of additional audit mittee variables such as size and frequency of meetings as well as the independence of members. We also extend board independence to examine whether the separation of the chief executive and board chair roles is associated with earnings management. A further contribution is the inclusion of internal audit as a governance mechanism that is likely to be associated with a reduction in the level of earnings management. While there has been increasing emphasis on the role played in governance by internal audit,no prior earnings management studies have included this variable. Australia is an ideal setting to examine this issue as evidence suggests that many listed panies in Australia do not have an internal audit function. Goodwin and Kent(2020)report that the use of internal audit is associated with the size of the pany and its mitment to strong corporate governance and risk management. Our principal tests,using absolute discretionary accruals to measure earnings management,suggest that a lower level of earnings management is associated with the presence of nonexecutive directors on the board. We also find a negative association between earnings management and audit mittees prising a majority of non executives,but no relationship between earnings management and mittees prised solely of nonexecutives. Our results do not support a relationship between earnings management and the use of internal auditor the choice of a Big 5 auditor. Additional testing,using small positive changes in earnings as an indication of earnings management,suggests that audit mittees are associated with this measure of earnings results have important practical implications because of the heightened interest in corporate governance matters from governments,regulators and standard setters. The remainder of the paper is divided into four sections. Section 2 provides the theoretical background for the study and develops the 3 outlines the research method used to test the hypotheses. It also discusses the measurement of earnings management through the estimation of discretionary 4 reports the present study39。 (SEC,1999,),effectively weakens this monitoring mechanism as it might conceal poor underlying performance. The published literature has developed and empirically tested a variety of motivations for earnings management to occur(Fields etal.,2020). These fall broadly within the categories of agency costs,information asymmetries and externalities affecting noncontracting parties. However,we are primarily concerned with the extent to which certain corporate governance attributes limit the opportunity to manage earnings,rather than specific incentives for earnings management to occur. Although we attempt to control for two widely documented motives for earnings management。Jones,1991。Dechow et al.,1996).Board independence refers to the extent to which a board is prised of nonexecutive directors who have no relationship with the firm beyond the role of director. A nonexecutive director is defined as a director who is not employed in the pany’s business activities and whose role is to provide an outsider’s contribution and oversight to the board of directors(Hanrahan et al.,2020).A nonexecutive director who is entirely independent from management is expected to offer shareholders the greatest protection in monitoring management (Baysinger and Butler,1985).Fama and Jensen(1983a,b)posit that the superior monitoring ability of nonexecutives can be attributed to the incentive to maintain their reputations in the external labour market. The published literature is supported by Australian and international corporate governance guidelines,which recognize the importance of the monitoring role of nonexecutive directors(AIMA,1997,1995。NYSE,2020。StandardsAustraliaInternational,2020。Cadbury Committee,1992).These guides suggest that best practice with respect to board position is,at least,a majority of nonexecutive or independent is supported by research evidence such as Beasley(1996),who finds that the presence of independent directors on the board reduces the likelihood of financial statement fraud,and Dechow et al.(1996),who report that firms with a greater proportion of nonexecutive directors are less likely to be subject to Securities and Exchange Commission(SEC)enforcement actions for violating US on these findings,both Peasnell et al.(2020)and Chtourou et al.(2020)predict that board independence is also likely to be associated with a reduction in earnings Peasnell et al.(2020)find empirical support for their prediction with respect to UK firms,Chtourou et al.(2020)fail to find an association between earnings management and board independence for a sample of US these conflicting results,we hypothesize a negative association between board independence and earnings ,we test the following hypothes