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The Effect of Changes in Board Characteristics on the Accruals’ Quality in Firms Restating the Financial Statements

The International Journal of Financial Management

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Title The Effect of Changes in Board Characteristics on the Accruals’ Quality in Firms Restating the Financial Statements
 
Creator Zalaghi, Hassan; BU-Ali Sina University, Department of Economic and Social Sciences, Accounting Group, Hmedan, I.R.IRAN.
Aghaei, Mohammadali; Assistant Professor of Accounting, Tarbiat Modarres University, Tehran, Iran.
 
Subject Board attributes, accrual quality, Financial Statements Restatement
 
Description The present paper tries to examine whether the improvement in the board structure in firms restating the financial statements leads to improved earnings quality during the next restatement period. Previous empirical researches show that corporate governance attributes, especially those of the board (of directors) are more beneficial in reducing the financial statements distortion. Thus, the present paper has selected the board attributes as an indicator of internal corporate governance. In order to measure the board attributes, a composite index of six characteristics including board independence, CEO’s tenure, differentiation between the position of the CEO and that of the chairman, board size, independent chairman and board with a specialization in finance has been used.Also, given the multi-dimensional nature of the earnings’ quality, the accruals’ quality has been used to represent it.
The sample includes 62 manufacturing firms enlisted in Tehran Stock Exchange which have had only one significant restatement between 2001 and 2011, and which have not had a significant restatement within three years before and three years after the restatement. Findings indicate that by improving the composite index of the board attributes, the accruals’ quality has significantly increased between the misstatement period and the post-restatement period.
 
Publisher Publishing India Group
 
Date 2015-07-15
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.myresearchjournals.com/index.php/IJFM/article/view/3084
 
Source International Journal of Financial Management; Vol 4, No 1 (2014)
2229-5682
 
Language eng
 
Relation http://www.myresearchjournals.com/index.php/IJFM/article/view/3084/3012
 
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International Journal of Financial Management