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The quality of reported earnings and the monitoring role of the board: Evidence from small and medium companies
Southern African Business Review
View Archive Info| Field | Value | |
| Title |
The quality of reported earnings and the monitoring role of the board: Evidence from small and medium companies
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| Creator |
Smit, A
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| Subject |
agency theory, corporate governance, non-executive directors, board composition, earnings quality, conservatism, timeliness of earnings, monitoring ability, small and medium-sized companies
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| Description |
The purpose of this paper is to investigate whether corporate governance initiatives in South Africa that relate to the monitoring ability of the non-executive directors on the board of small and medium companies have improved earnings quality by adopting conservative accounting practices. The sample construct includes the 2008 – 2011 reporting periods of South African companies listed on the Alternative Exchange (AltX). A reverse regression of earnings on returns was used to examine the market-based attributes of earnings quality, i.e. conservatism and the timeliness of earnings. No evidence was found that the boards of small and medium-sized companies are inclined to adopt conservative accounting practices that will result in the asymmetric timeliness of earnings. There is also no evidence that the quality of reported earnings improved as a result of the monitoring ability of the board with reference to the representation of non-executive directors on the board. The fi ndings can be of interest to investors, managers and regulators as the effi ciency of corporate boards and the transparency of financial reporting have implications for all of them.Key words: agency theory, corporate governance, non-executive directors, board composition, earnings quality, conservatism, timeliness of earnings, monitoring ability, small and medium-sized companies
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| Publisher |
College of Economic and Management Sciences (UNISA)
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| Contributor |
—
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| Date |
2015-10-28
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://www.ajol.info/index.php/sabr/article/view/124753
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| Source |
Southern African Business Review; Vol 19, No 2 (2015): Special Edition; 52-73
1998-8125 1561-896X |
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| Language |
eng
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| Relation |
http://www.ajol.info/index.php/sabr/article/view/124753/114269
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| Rights |
Copyright to the journal content belongs to the College of Economic and Management Sciences
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