The association between foreign directors and opportunistic financial reporting
This study examines the effect of foreign directors in the board of directors on the monitoring function by analyzing the association between foreign directors and opportunistic financial reporting. The authors address this question by examining the effect of the foreign directors in the board on fi...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
LLC "CPC "Business Perspectives"
2018-11-01
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| Series: | Investment Management & Financial Innovations |
| Subjects: | |
| Online Access: | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/11121/imfi_2018_04_Suh.pdf |
| _version_ | 1811319281577623552 |
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| author | JungHwa Suh Ho-Young Lee Hansol Lee |
| author_facet | JungHwa Suh Ho-Young Lee Hansol Lee |
| author_sort | JungHwa Suh |
| collection | DOAJ |
| description | This study examines the effect of foreign directors in the board of directors on the monitoring function by analyzing the association between foreign directors and opportunistic financial reporting. The authors address this question by examining the effect of the foreign directors in the board on firms’ discretionary accruals and book-tax difference. The researchers analyze by using Korean firm data for the years 2001–2014 as Korea is one of the few countries that nepotism is strong within the board, providing the ideal setting to analyze the effect of foreign directors on the monitoring function of the board. The authors find that foreign directors have a positive effect on the monitoring function of the board, as discretionary accruals and book-tax differences of firms with foreign directors are lower than those without foreign directors. Further, the researchers find that the positive effect of foreign directors on the monitoring function is more pronounced if foreign directors are independent directors or expertise in accounting or finance. Overall, the findings support the view that foreign directors in the board increase the board diversity, which increases the independence of the board and so the monitoring function. |
| first_indexed | 2024-04-13T12:40:02Z |
| format | Article |
| id | doaj.art-5d546a8b239d4aed81ec5b4d5be66e4b |
| institution | Directory Open Access Journal |
| issn | 1810-4967 1812-9358 |
| language | English |
| last_indexed | 2024-04-13T12:40:02Z |
| publishDate | 2018-11-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj.art-5d546a8b239d4aed81ec5b4d5be66e4b2022-12-22T02:46:33ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582018-11-011549811210.21511/imfi.15(4).2018.0811121The association between foreign directors and opportunistic financial reportingJungHwa Suh0Ho-Young Lee1Hansol Lee2Ph.D. Candidate, Yonsei University, SeoulProfessor, Yonsei University, SeoulPh.D. Candidate, Yonsei University, SeoulThis study examines the effect of foreign directors in the board of directors on the monitoring function by analyzing the association between foreign directors and opportunistic financial reporting. The authors address this question by examining the effect of the foreign directors in the board on firms’ discretionary accruals and book-tax difference. The researchers analyze by using Korean firm data for the years 2001–2014 as Korea is one of the few countries that nepotism is strong within the board, providing the ideal setting to analyze the effect of foreign directors on the monitoring function of the board. The authors find that foreign directors have a positive effect on the monitoring function of the board, as discretionary accruals and book-tax differences of firms with foreign directors are lower than those without foreign directors. Further, the researchers find that the positive effect of foreign directors on the monitoring function is more pronounced if foreign directors are independent directors or expertise in accounting or finance. Overall, the findings support the view that foreign directors in the board increase the board diversity, which increases the independence of the board and so the monitoring function.https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/11121/imfi_2018_04_Suh.pdfboard diversityboard independencebook-tax differencediscretionary accrualsforeign directormonitoring function |
| spellingShingle | JungHwa Suh Ho-Young Lee Hansol Lee The association between foreign directors and opportunistic financial reporting Investment Management & Financial Innovations board diversity board independence book-tax difference discretionary accruals foreign director monitoring function |
| title | The association between foreign directors and opportunistic financial reporting |
| title_full | The association between foreign directors and opportunistic financial reporting |
| title_fullStr | The association between foreign directors and opportunistic financial reporting |
| title_full_unstemmed | The association between foreign directors and opportunistic financial reporting |
| title_short | The association between foreign directors and opportunistic financial reporting |
| title_sort | association between foreign directors and opportunistic financial reporting |
| topic | board diversity board independence book-tax difference discretionary accruals foreign director monitoring function |
| url | https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/11121/imfi_2018_04_Suh.pdf |
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