Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil
One of the board of directors' responsibilities is to monitor the quality of information disclosed in financial reports. The board's structural and compositional characteristics can affect the quality of reported accounting information. The aim of this study was to investigate the effects...
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| Format: | Article |
| Language: | English |
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Universidade de São Paulo
2014-12-01
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| Series: | Revista Contabilidade & Finanças |
| Subjects: | |
| Online Access: | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772014000300255&lng=en&tlng=en |
| _version_ | 1811328824932040704 |
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| author | Luciana Holtz Alfredo Sarlo Neto |
| author_facet | Luciana Holtz Alfredo Sarlo Neto |
| author_sort | Luciana Holtz |
| collection | DOAJ |
| description | One of the board of directors' responsibilities is to monitor the quality of information disclosed in financial reports. The board's structural and compositional characteristics can affect the quality of reported accounting information. The aim of this study was to investigate the effects of the board's structural and compositional characteristics on the quality of accounting information of companies listed on the Brazilian Securities, Commodities, and Futures Exchange (Bolsa de Mercadorias e Futuros - BM&FBovespa). Specifically, the characteristics studied were the size and independence of the board of directors and separation of the roles of chairman and executive director. Accounting information relevance and earnings informativeness were used as proxies for the quality of accounting information. The sample included non-financial companies listed on the BM&FBovespa with annual stock market liquidity higher than 0.001, covering the period from 2008–2011. Data were collected from the Economática® database and directly from companies' annual reports and reference forms available on the Securities Commission (Comissão de Valores Mobiliários - CVM) or BM&FBovespawebsites. Data analysis was undertaken using the multiple regression technique for calculating the models of accounting information relevance and earnings informativeness. The results reveal that, for companies that trade stocks on the BM&FBovespa in the Brazilian market, the characteristics of board independence and separation of the roles of chairman and executive director positively influence the quality of reported accounting information, specifically regarding the relevance of equity. Earnings informativeness is positively affected by board independence and negatively affected by larger board size (more than nine members). Overall, the results corroborate international studies such as those of Vafeas (2000), Firth, Fung, and Rui (2007), Ahmed, Hossain, and Adams (2006) and Dimitropoulos and Asteriou (2010), especially regarding board independence. The study showsthat stronger governance structures have a positive effect on the quality of reported accounting information. |
| first_indexed | 2024-04-13T15:32:52Z |
| format | Article |
| id | doaj.art-23de6d4f300349ecb4941b4e8084b1a6 |
| institution | Directory Open Access Journal |
| issn | 1808-057X |
| language | English |
| last_indexed | 2024-04-13T15:32:52Z |
| publishDate | 2014-12-01 |
| publisher | Universidade de São Paulo |
| record_format | Article |
| series | Revista Contabilidade & Finanças |
| spelling | doaj.art-23de6d4f300349ecb4941b4e8084b1a62022-12-22T02:41:20ZengUniversidade de São PauloRevista Contabilidade & Finanças1808-057X2014-12-01256625526610.1590/1808-057x201412010S1519-70772014000300255Effects of Board of Directors' Characteristics on the Quality of Accounting Information in BrazilLuciana HoltzAlfredo Sarlo NetoOne of the board of directors' responsibilities is to monitor the quality of information disclosed in financial reports. The board's structural and compositional characteristics can affect the quality of reported accounting information. The aim of this study was to investigate the effects of the board's structural and compositional characteristics on the quality of accounting information of companies listed on the Brazilian Securities, Commodities, and Futures Exchange (Bolsa de Mercadorias e Futuros - BM&FBovespa). Specifically, the characteristics studied were the size and independence of the board of directors and separation of the roles of chairman and executive director. Accounting information relevance and earnings informativeness were used as proxies for the quality of accounting information. The sample included non-financial companies listed on the BM&FBovespa with annual stock market liquidity higher than 0.001, covering the period from 2008–2011. Data were collected from the Economática® database and directly from companies' annual reports and reference forms available on the Securities Commission (Comissão de Valores Mobiliários - CVM) or BM&FBovespawebsites. Data analysis was undertaken using the multiple regression technique for calculating the models of accounting information relevance and earnings informativeness. The results reveal that, for companies that trade stocks on the BM&FBovespa in the Brazilian market, the characteristics of board independence and separation of the roles of chairman and executive director positively influence the quality of reported accounting information, specifically regarding the relevance of equity. Earnings informativeness is positively affected by board independence and negatively affected by larger board size (more than nine members). Overall, the results corroborate international studies such as those of Vafeas (2000), Firth, Fung, and Rui (2007), Ahmed, Hossain, and Adams (2006) and Dimitropoulos and Asteriou (2010), especially regarding board independence. The study showsthat stronger governance structures have a positive effect on the quality of reported accounting information.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772014000300255&lng=en&tlng=enInformatividade dos lucrosRelevância da informação contábilCaracterísticas do conselho de administração |
| spellingShingle | Luciana Holtz Alfredo Sarlo Neto Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil Revista Contabilidade & Finanças Informatividade dos lucros Relevância da informação contábil Características do conselho de administração |
| title | Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil |
| title_full | Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil |
| title_fullStr | Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil |
| title_full_unstemmed | Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil |
| title_short | Effects of Board of Directors' Characteristics on the Quality of Accounting Information in Brazil |
| title_sort | effects of board of directors characteristics on the quality of accounting information in brazil |
| topic | Informatividade dos lucros Relevância da informação contábil Características do conselho de administração |
| url | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772014000300255&lng=en&tlng=en |
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