Work

Active Independent Directors and Earnings Quality

Year: 2022

Type: article

Abstract: We examine the relationship between active independent directors and earnings quality for U.S. firms. We construct measures that proxy for activeness of independent directors and find that the proportion of active independent directors is under half on average. Our finding shows that earnings quality increases with the percentage of active independent directors on the board. Once the active independent directors are separated out, the other independent directors do not have any effect on earnings quality. This finding supports the hypothesis that the activeness of independent directors is incrementally significant over just the proportion of independent directors for the quality of reported earnings.

Source: Theoretical Economics Letters

DOI: 10.4236/tel.2022.123048

Authors: Yuanto Kusnadi, Bin Srinidhi, Ye Sun, Jiwei Wang

Institutions: Singapore Management University, The University of Texas at Arlington, Shenzhen Stock Exchange

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: diamond

OpenAlex ID: W4285305460

FWCI: 1.813

Cites: 28

Cited by: 4

Related to: 10