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Busy boards and corporate earnings management: an international analysis
Review of Accounting and Finance Pub Date : 2019-11-11 , DOI: 10.1108/raf-07-2017-0144
Stephen P. Ferris , Min-Yu (Stella) Liao

Because of our limited understanding of the incidence and effect of board busyness globally, the mixed evidence of the effect of board busyness obtained in the USA and the divergence of international patterns of director busyness from that observed in the USA, the author contends that there is a strong need to examine board busyness from a global perspective. The literature, however, does not examine the effect of board busyness on reported earnings quality and certainly does not analyze it internationally. Consequently, the purpose of this study is to examine the effect of multiple board appointments on the quality of a firm’s reported earnings.,The research design for this study is empirical. It uses both univariate and multivariate statistical analysis to examine historical corporate accounting, finance and governance data.,Consistent with the busyness hypothesis of corporate governance, the author finds that firms with a higher proportion of busy independent directors or busy CEOs manage their earnings more extensively. Further, the findings of this study present that firms with a higher proportion of busy independent audit committee members have poorer financial reporting quality. Using a sample of American Depository Receipts (ADRs), this study determines that the ineffectiveness of busy boards regarding earnings management is mitigated by the listing regulations imposed by US exchanges.,The author believes that this study offers new and important evidence regarding the debate whether busy directors provide knowledge, skill and corporate connections, or whether they are overextended and, thus, unable to fully perform their monitoring duties. This study shows that firms with busy directors are associated with poorer financial reporting quality and, consistent with the busyness hypothesis, are less effective as managerial monitors.,This study provides useful guidance regarding board design and the kinds of policies that firms should adopt regarding multiple boarding.,The social implications focus on the public policy implications regarding the importance of effective corporate governance in the reporting of financial wealth, wealth creation and wealth management.,This is the first study that examines the relation between board/committee busyness and corporate earnings management using a comprehensive set of international firms. Second, the author expands the analysis of audit committee into a new dimension: committee quality as captured by the busyness of its independent members. This study also contributes to the ongoing debate in the corporate finance literature regarding the reputation and busyness hypotheses of multiple directorships.

中文翻译:

繁忙的董事会和企业收益管理:国际分析

由于我们对全球董事会忙碌的发生率和影响的了解有限,在美国获得的董事会忙碌影响的混合证据以及在美国观察到的董事会忙碌国际模式的差异,作者认为存在迫切需要从全球角度检查董事会的忙碌状况。但是,文献没有研究董事会忙碌状况对报告的盈余质量的影响,当然也没有在国际上进行分析。因此,本研究的目的是检验多个董事会任命对公司报告收益质量的影响。本研究的研究设计是经验性的。它使用单变量和多变量统计分析来检查历史公司会计,财务和治理数据。与公司治理的繁忙度假设一致,作者发现,繁忙的独立董事或繁忙的CEO比例较高的公司更广泛地管理其收益。此外,这项研究的结果表明,繁忙的独立审计委员会成员比例较高的公司财务报告质量较差。本研究使用美国存托凭证(ADR)样本,确定美国交易所施加的上市规则减轻了忙碌的董事会在盈余管理方面的无效性。作者认为,该研究为有关是否是否存在争议的研究提供了新的重要证据。繁忙的董事提供知识,技能和公司联系,或者他们是否任职过度,因此无法完全履行其监督职责。这项研究表明,董事繁忙的公司与较差的财务报告质量相关联,并且与繁忙性假设相一致,作为管理人员的监督效果较差。该研究为董事会设计以及公司应采取的多种政策提供了有用的指导董事会。社会影响力集中在公共公司对有效公司治理在财务财富报告,财富创造和财富管理中的重要性的影响方面。这是第一项研究董事会/委员会繁忙度与公司收益之间关系的研究使用一整套国际公司进行管理。其次,作者将审计委员会的分析扩展到一个新的维度:独立成员的忙碌反映出委员会的质量。
更新日期:2019-11-11
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