Serving the truth: Do directors with media background improve financial reporting quality?

Jing Bai, Xuesong Tang and Yuxin Zheng

International Review of Financial Analysis, 2023, vol. 85, issue C

Abstract: This study examines whether and how independent directors with media background affect financial reporting quality. Using a proprietary dataset of independent directors' backgrounds, we find that firms with media backgrounds directors sitting on the board have lower absolute discretionary accruals. Besides, the effect is more pronounced when media background independent directors are from a news agency, or the directors bear higher reputation cost. Furthermore, media independent directors play a monitoring role by saying “no” at the board meeting and increasing the probability of exposure to financial frauds to reduce discretionary accruals. Overall, our evidence suggests that media independent directors with higher integrity and reputation concerns could improve firms' financial quality.

Keywords: Media professionals; Independent director; Discretionary accruals; Monitoring role (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:85:y:2023:i:c:s1057521922004021

DOI: 10.1016/j.irfa.2022.102452

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