Corporate governance and accounting conservatism: evidence from STOXX EUROPE 600 companies

Hanen Ben Fatma () and Jamel Chouaibi ()
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Hanen Ben Fatma: University of Sfax
Jamel Chouaibi: University of Sfax

International Journal of Disclosure and Governance, 2025, vol. 22, issue 3, No 12, 776-790

Abstract: Abstract The current study aimed to investigate the effect of the characteristics of two corporate governance mechanisms, namely, board of directors and audit committee, on the accounting conservatism of European companies. The corporate governance attributes, particularly board size, board independence, board gender diversity, audit committee financial expertise, and audit committee meetings were used. The sample of this empirical research consisted of 362 non-financial companies belonging to 17 European countries listed on the STOXX EUROPE 600 index from 2011 to 2021, and panel data regression was used for analysis. Empirical evidence demonstrates that board size is negatively associated with accounting conservatism, while board independence, board gender diversity, audit committee financial expertise, and audit committee meetings are positively associated. Concerning the control variables, the findings show that firm size, leverage, and legal system are significant factors in influencing the level of accounting conservatism. Nevertheless, firm corporate social responsibility (CSR) is not significantly correlated with accounting conservatism. Our findings would be of interest to academic researchers, non-financial companies, and policymakers by emphasizing the role of some corporate governance mechanisms in the improvement of conservative reporting practices, especially in a developed market setting, namely Europe.

Keywords: Accounting conservatism; Corporate governance; Board of directors; Audit committee; STOXX 600; Financial reporting (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41310-024-00267-y

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