External Corporate Governance and Misreporting

William R. Baber, Sok†Hyon Kang, Lihong Liang and Zinan Zhu

Contemporary Accounting Research, 2015, vol. 32, issue 4, 1413-1442

Abstract: This study investigates how external corporate governance provisions, specifically statutory and corporate charter provisions that limit direct shareholder participation in the governance process, affect the likelihood of an accounting restatement. The analysis indicates that strong external governance (fewer restrictions on shareholder participation) is associated with a relatively low incidence of accounting restatements. The effect of external governance is incremental to that of internal governance, which is considered as provisions that foster effective board oversight of management. Such evidence supports the premise that shareholder participation improves financial reporting quality.

Date: 2015
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https://doi.org/10.1111/1911-3846.12137

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Persistent link: https://EconPapers.repec.org/RePEc:wly:coacre:v:32:y:2015:i:4:p:1413-1442

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