Board structure and earnings persistence: The mediation effect of board processes

Dinithi Ranasinghe, Paul Mather and Suzanne Young
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Dinithi Ranasinghe: Department of Accountancy and Finance, School of Business, University of Otago, Dunedin, New Zealand
Suzanne Young: La Trobe Business School, College of Arts, Social Sciences and Commerce, La Trobe University, Melbourne, VIC, Australia

Australian Journal of Management, 2020, vol. 45, issue 2, 266-293

Abstract: Prior research has overlooked board processes and examined direct links between board structure and monitoring financial reporting with mixed results. We use an input–process–output heuristic model to argue that board processes mediate the association between board structure and earnings persistence. Our results support this assertion by showing the mediating effect of board processes and the impact on managerial behaviour in relation to monitoring financial reporting. We contribute to the accounting and finance literature by demonstrating the importance of examining alternative theoretical models and board-process variables, along with structure. This article also highlights the importance of establishing best-practice guidelines around board processes in governance regulations. JEL Classification: M41, G34

Keywords: Board processes; cognitive conflict; earnings persistence; effort norms; knowledge and skills; mediation (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:45:y:2020:i:2:p:266-293

DOI: 10.1177/0312896219851553

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