The association between foreign directors and opportunistic financial reporting
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Author(s)JungHwa SuhLink to ORCID Index: https://orcid.org/0000-0003-3307-1158
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Ho-Young LeeLink to ORCID Index: https://orcid.org/0000-0003-4950-5838
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Hansol LeeLink to ORCID Index: https://orcid.org/0000-0001-6776-410X
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DOIhttp://dx.doi.org/10.21511/imfi.15(4).2018.08
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Article InfoVolume 15 2018, Issue #4, pp. 98-112
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207 Downloads
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Creative Commons Attribution 4.0 International License
This study examines the effect of foreign directors in the board of directors on the monitoring function by analyzing the association between foreign directors and opportunistic financial reporting. The authors address this question by examining the effect of the foreign directors in the board on firms’ discretionary accruals and book-tax difference. The researchers analyze by using Korean firm data for the years 2001–2014 as Korea is one of the few countries that nepotism is strong within the board, providing the ideal setting to analyze the effect of foreign directors on the monitoring function of the board. The authors find that foreign directors have a positive effect on the monitoring function of the board, as discretionary accruals and book-tax differences of firms with foreign directors are lower than those without foreign directors. Further, the researchers find that the positive effect of foreign directors on the monitoring function is more pronounced if foreign directors are independent directors or expertise in accounting or finance. Overall, the findings support the view that foreign directors in the board increase the board diversity, which increases the independence of the board and so the monitoring function.
- Keywords
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JEL Classification (Paper profile tab)M480
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References42
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Tables10
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Figures0
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- Table 1. Sample composition by year and industry
- Table 2. Descriptive statistics
- Table 3. Correlation matrix
- Table 4. The effect of the foreign directors in the board of directors on the discretionary accruals
- Table 5. The effect of foreign directors on the board of directors on BTD
- Table 6. The effect of foreign independent director on the board on the discretionary accrual
- Table 7. The effect of foreign independent director on the board on BTD
- Table 8. The effect of foreign directors with expertise in accounting or finance on discretionary accruals
- Table 9. The effect of foreign directors with expertise in accounting or finance on BTD
- Table 1A. Definition of variables
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The relationship between corporate social responsibility and earnings management: accounting for endogeneity
Hyunjung Choi , Byungchul Choi ,
Jungyoon Byun
doi: http://dx.doi.org/10.21511/imfi.15(4).2018.06
Investment Management and Financial Innovations Volume 15, 2018 Issue #4 pp. 69-84 Views: 4619 Downloads: 545 TO CITE АНОТАЦІЯThis study examines the relationship between corporate social responsibility (CSR) and earnings management after controlling for endogeneity of CSR. Using a sample of non-financial firms listed on Korean Securities Market between 2002 and 2010, this study finds that ignoring endogeneity biases the estimated relation between CSR and earnings management. Specifically, the results show that the negative and significant relation between CSR commitment and discretionary accruals reported in the previous studies becomes insignificant. However, the negative and significant relation between CSR commitment and real activities manipulation remains significant even when the endogeneity of CSR commitment is taken into account. Therefore, this study provides evidence that proactive CSR engagement significantly affects firm’s practice of real activities manipulation, while it does not affect its practice of discretionary accruals. These results indicate that CSR commitment leads managers to be more responsible in management of operational activities than in accruals management.
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Does board composition have an impact on CSR reporting?
Patrick Velte
doi: http://dx.doi.org/10.21511/ppm.15(2).2017.02
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4473 Downloads: 1719 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
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Corporate governance and quality of financial statements: a study of listed Nigerian banks
Uwalomwa Uwuigbe ,
Eluyela Damilola Felix ,
Olubukola Ranti Uwuigbe ,
Obarakpo Teddy ,
Falola Irene
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.02
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 12-23 Views: 1915 Downloads: 437 TO CITE АНОТАЦІЯThis study investigated the influence of Corporate governance on the timeliness of financial reports of listed banks in Nigeria. In order to provide answers to the research questions raised in this study, data were generated from the annual report of the listed banks on the Nigerian Stock Exchange considering the period 2008–2015. The study used Board size, Board Independence and Foreign Executives on the board as proxies for corporate governance. The data were analyzed using descriptive statistics, correlation matrix and panel data regression analysis. It was observed that board size had a non-significant negative relationship with the timeliness of financial reports. Also, the study observed that board independence also had a non-significant negative relationship with the timeliness of financial reports. Finally, it was observed that foreign executives on the board had a significant positive relationship with the timeliness of financial reports. The study thus recommends that the existing legal framework in Nigeria should be developed that clearly specifies the rights and obligations of a bank, its management and, of course, other stakeholders.
