The effect of board composition on the informativeness and quality of annual earnings: Empirical evidence from Greece
This study examines how the informational quality of annual accounting earnings, varies according to the size and composition of the board of directors of publicly listed firms within the Greek capital market. Data analysis over a period of five years (2000–2004) revealed that the informativeness of...
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Published in | Research in international business and finance Vol. 24; no. 2; pp. 190 - 205 |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
Elsevier B.V
01.06.2010
Elsevier |
Series | Research in International Business and Finance |
Subjects | |
Online Access | Get full text |
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Summary: | This study examines how the informational quality of annual accounting earnings, varies according to the size and composition of the board of directors of publicly listed firms within the Greek capital market. Data analysis over a period of five years (2000–2004) revealed that the informativeness of annual accounting earnings is positively related to the fraction of outside directors serving on the board, but it is not related to board size. Additionally, firms with a higher proportion of outside board members proved to be more conservative when reporting bad news but on the contrary they do not display greater timeliness on the recognition of good news. Finally, firms with a higher proportion of outside directors report earnings of higher quality compared to firms with a low proportion of outside directors. Our results are robust to several sensitivity tests controlling for endogeneity, firm's fixed effects and alternative models for the estimation of discretionary accruals. |
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ISSN: | 0275-5319 1878-3384 |
DOI: | 10.1016/j.ribaf.2009.12.001 |