Board Interlocks and Earnings Management Contagion
نویسندگان
چکیده
We examine whether earnings management spreads from firm to firm via board connections. We find that contagion of accounting quality occurs via directors in interlocking boards with other firms. A firm with director links to firms that restated earnings tends to have poorer accounting quality and higher likelihood of restating its own financial reports. A firm with director links to firms that did not restate earnings tends to have higher accounting quality. This evidence supports the idea that economic behavior such as accruals management spreads through social networks.
منابع مشابه
Board interlocks and the diffusion of disclosure policy
In this study, we examine whether board connections through shared directors influence firm disclosure policies. To overcome endogeneity challenges, we focus on an event that represents a significant change in firm disclosure policy: the cessation of quarterly earnings guidance. Our research design allows us to exploit the timing of director interlocks and therefore differentiate the director i...
متن کاملThe Effect of the Characteristics of Board of Directors on Real Earnings Management
The purpose of this study is to evaluate the effect of the characteristics of board of directors (Chief Executive Officer Duality, CEO tenure duration, size and independence of the board of directors) on earnings management. In this study, data from 62 companies listed in the Tehran Stock Exchange during the years of 2011 to 2015 were used. The statistical method used in this research is panel ...
متن کاملImpact of Institutional Ownership and Board Independence on the Relationship Between Excess Free Cash Flow and Earnings Management
However, the free cash flows scale is important for the financial health of the company, but it has also its own limitations. Moreover, it’s not immune from accounting tricks. Free cash flows can be considered as a measure of value for shareholders of listed companies on Tehran Stock Exchange. The managers of these companies have tended to use the earnings management for managing the free cash ...
متن کاملCEO power and earnings announcement tone with emphasis on the role of board oversight
The value of earnings reporting depends on the information it provides to the capital market. In the meantime, managers with the power and control of the situation interfere not only in quantity but also in the quality of reporting, so they declare profit in a more positive tone. However, supervisory management leads to protecting shareholder interests and reducing agency problems, limiting the...
متن کاملActivating the Role of Audit Committees and Boards of Directors in Restricting Earnings Management Practices: A Perspective of Auditors in Jordan
The study objects for investigating the possibility of activating both audit committee and board of directors for restricting the practices of earnings management phenomenon. To achieve this objective, a questionnaire had been developed and self-administered for a selected sample consists of 123 auditors working in Jordan based on the simple random sampling method. The study first hypothesis is...
متن کامل