Year: 2024
Type: article
Abstract: This study systematically examines the impact of board independence on financial reporting quality based on data from Chinese A-share listed companies between 2010 and 2022. The research findings demonstrate a significant positive correlation between board independence and financial reporting quality: for every 10 percentage point increase in the proportion of independent directors, accrual quality improves by 0.023 units and earnings persistence increases by 0.035 units. The study also finds that substantial participation of independent directors is more important than mere meeting attendance, as attendance rates show only a weak correlation with financial reporting quality. Further analysis reveals that the positive role of board independence is more pronounced in state-owned enterprises (SOEs). Notably, the proportion of independent directors with financial expertise and the degree of marketization of the company are key factors in strengthening this relationship. This study provides new empirical evidence for improving the independent director system in Chinese listed companies, highlighting the crucial role of independent directors in enhancing financial reporting quality, particularly in state-owned enterprises.
Author: Ying Wang
Institution: National University of Malaysia
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4406035854