Open AccessRelationships Between Director Profile And Restatements Of Suspect Earnings
Author(s) -
Joe Ueng,
Daryl Koehn,
Ching Liang Chang
Publication year - 2011
Publication title -
journal of business and economics research
Language(s) - English
Resource type - Journals
eISSN - 2157-8893
pISSN - 1542-4448
DOI - 10.19030/jber.v7i4.2279
Subject(s) - suspect , earnings , fiduciary , accounting , corporate governance , style (visual arts) , business , management , economics , political science , law , history , duty , archaeology
The large number of recent earnings restatements suggests that boards have not been discharging their fiduciary duties very well. This paper examines which director traits, if any, are correlated with the need to restate suspect earnings. We find that the only significant aspect of director profile is director independence: boards with a larger percentage of outside directors are less likely to have restated suspect earnings that boards with a lesser percentage. The paper concludes with some thoughts on why current research practice of focusing on formal corporate governance (board composition, board traits, etc.) needs to be supplemented with research into power dynamics.