Corporate Governance, Growth Opportunities, and Earnings Restatements: Effects of a Corporate Governance Code

Ken Y. Chen, Randal J. Elder and Yung-Ming Hsieh

Asia-Pacific Journal of Accounting & Economics, 2011, vol. 18, issue 2, 169-200

Abstract: The study first examines whether firms that adopted the corporate governance mechanisms mandated by the newly enacted Corporate Governance Code in Taiwan are associated with lower incidence of earnings restatements. We find that firms with independent directors (supervisors) are associated with lower incidence of earnings restatements. We further examine this research question in a growth opportunity setting, a prevailing environmental feature in this emerging market, and find that high-growth firms having independent directors (supervisors) with financial expertise are associated with lower incidence of earnings restatements, suggesting that financial expertise of independent directors (supervisors) is important in the financial reporting function in high-growth firms.

Date: 2011
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DOI: 10.1080/16081625.2011.9720880

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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