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- Publisher Website: 10.1007/s11142-015-9316-0
- Scopus: eid_2-s2.0-84939951635
- WOS: WOS:000353813200010
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Article: Does Increased Board Independence Reduce Earnings Management? Evidence from Recent Regulatory Reforms
Title | Does Increased Board Independence Reduce Earnings Management? Evidence from Recent Regulatory Reforms |
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Authors | |
Keywords | Board independence Corporate governance Earnings management Information environment |
Issue Date | 2015 |
Publisher | Springer. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=1380-6653 |
Citation | Review of Accounting Studies, 2015, v. 20, p. 899-933 How to Cite? |
Abstract | We examine whether recent regulatory reforms requiring majority board independence reduce the extent of earnings management. Firms that did not have a majority of independent directors before the reforms (referred to as noncompliant firms) are required to increase their board independence. We find that, while noncompliant firms on average do not experience a significant decrease in earnings management after the reforms compared to other firms, noncompliant firms with low information acquisition cost experience a significant reduction in earnings management. The results are similar when we examine audit committee independence and when we use alternative proxies for information acquisition cost and earnings management. These findings indicate that independent directors’ monitoring is more effective in a richer information environment. |
Persistent Identifier | http://hdl.handle.net/10722/214712 |
ISSN | 2023 Impact Factor: 4.8 2023 SCImago Journal Rankings: 5.481 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chen, X | - |
dc.contributor.author | Cheng, Q | - |
dc.contributor.author | Wang, X | - |
dc.date.accessioned | 2015-08-21T11:52:24Z | - |
dc.date.available | 2015-08-21T11:52:24Z | - |
dc.date.issued | 2015 | - |
dc.identifier.citation | Review of Accounting Studies, 2015, v. 20, p. 899-933 | - |
dc.identifier.issn | 1380-6653 | - |
dc.identifier.uri | http://hdl.handle.net/10722/214712 | - |
dc.description.abstract | We examine whether recent regulatory reforms requiring majority board independence reduce the extent of earnings management. Firms that did not have a majority of independent directors before the reforms (referred to as noncompliant firms) are required to increase their board independence. We find that, while noncompliant firms on average do not experience a significant decrease in earnings management after the reforms compared to other firms, noncompliant firms with low information acquisition cost experience a significant reduction in earnings management. The results are similar when we examine audit committee independence and when we use alternative proxies for information acquisition cost and earnings management. These findings indicate that independent directors’ monitoring is more effective in a richer information environment. | - |
dc.language | eng | - |
dc.publisher | Springer. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=1380-6653 | - |
dc.relation.ispartof | Review of Accounting Studies | - |
dc.rights | The final publication is available at Springer via http://dx.doi.org/10.1007/s11142-015-9316-0 | - |
dc.subject | Board independence | - |
dc.subject | Corporate governance | - |
dc.subject | Earnings management | - |
dc.subject | Information environment | - |
dc.title | Does Increased Board Independence Reduce Earnings Management? Evidence from Recent Regulatory Reforms | - |
dc.type | Article | - |
dc.identifier.email | Wang, X: wangxacy@hku.hk | - |
dc.identifier.authority | Wang, X=rp01555 | - |
dc.identifier.doi | 10.1007/s11142-015-9316-0 | - |
dc.identifier.scopus | eid_2-s2.0-84939951635 | - |
dc.identifier.hkuros | 247690 | - |
dc.identifier.volume | 20 | - |
dc.identifier.spage | 899 | - |
dc.identifier.epage | 933 | - |
dc.identifier.eissn | 1573-7136 | - |
dc.identifier.isi | WOS:000353813200010 | - |
dc.publisher.place | USA | - |
dc.identifier.issnl | 1380-6653 | - |