The tenure of directors and value relevance of accounting information

Yuni Pristiwati Noer Widianingsih () and Doddy Setiawan ()
Additional contact information
Yuni Pristiwati Noer Widianingsih: STIE Swasta Mandiri Surakarta
Doddy Setiawan: Universitas Sebelas Maret

SN Business & Economics, 2023, vol. 3, issue 6, 1-18

Abstract: Abstract This study aims to determine the effect of director tenure on the relevance of accounting information by considering that share ownership is generally concentrated in Indonesia. Concentrated share ownership has the potential to cause agency conflicts between controlling and minority shareholders; therefore, corporate governance mechanisms must be controlled. The corporate governance structure in Indonesia is based on a two-tier system, where the highest power lies with the General Meeting of Shareholders (GMS). The holdings of the GMS are expected to be used as an entrenchment mechanism to determine the tenure of directors and commissioners. A longer tenure will accumulate the experience and expertise of the board of directors in controlling and considering who will be taken. Therefore, this study was conducted to determine whether director tenure can increase the value relevance of accounting information. This study was conducted using three value relevance measurements: earnings and book value information, earnings, and cash flow. The test results show that tenure can increase the relevance of the value of information. Testing was also carried out by classifying the tenure of directors as less than five years or more than five years. The test results consistently show that a longer tenure of directors has a greater effect on increasing the relevance of information value.

Keywords: Earnings; Value relevance; Tenure; Corporate governance (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s43546-023-00476-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:snbeco:v:3:y:2023:i:6:d:10.1007_s43546-023-00476-7

Ordering information: This journal article can be ordered from
https://www.springer.com/journal/43546

DOI: 10.1007/s43546-023-00476-7

Access Statistics for this article

SN Business & Economics is currently edited by Gino D'Oca

More articles in SN Business & Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().