Do independent directors cause improvements in firm transparency?

Journal of Financial Economics

Volumn 113, Issue 3, 2014, Pages 383-403

  Armstrong, Christopher S ^a   Core, John E ^b   Guay, Wayne R ^a  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b MASSACHUSETTS INSTITUTE OF TECHNOLOGY   (United States)

Author keywords

Board of directors; Board regulations; Corporate governance; Corporate transparency; Information asymmetry

Indexed keywords

EID: 84905040980     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2014.05.009     Document Type: Article

References (60)

1. Aboody D., Hughes J., Liu J. Earnings quality, insider trading, and cost of capital. Journal of Accounting Research 2005, 43:651-673.
2. Adams R., Ferreira D. A theory of friendly boards. Journal of Finance 2007, 62:217-250.
3. Adams R., Hermalin B., Weisbach M. The role of boards of directors in corporate governance: a conceptual framework and survey. Journal of Economic Literature 2010, 48:58-107.
4. Aghion P., Tirole J. Formal and real authority in organizations. Journal of Political Economy 1997, 105:1-29.
5. Ahmed A.S., Duellman S. Accounting conservatism and board of director characteristics: an empirical analysis. Journal of Accounting and Economics 2007, 43:411-437.
6. Armstrong C., Core J., Taylor D., Verrecchia R. When does information asymmetry affect the cost of capital?. Journal of Accounting Research 2011, 49:1-40.
7. Armstrong C., Guay W., Weber J. The role of information and financial reporting in corporate governance and contracting. Journal of Accounting and Economics 2010, 50:179-234.
8. Beekes W., Pope P., Young S. The link between earnings timeliness, earnings conservatism and board composition: evidence from the UK. Corporate Governance: An International Review 2004, 12:47-59.
9. Berger, P., Li, F., Wong, F., 2011. The impact of Sarbanes-Oxley on cross-listed companies. Unpublished working paper. University of Chicago, University of Michigan, and INSEAD.
10. Boone A., Field L., Karpoff J., Raheja C. The determinants of corporate board size and independence. Journal of Financial Economics 2007, 85:66-101.
11. Bhushan R. Firm characteristics and analyst following. Journal of Accounting and Economics 1989, 11:255-274.
12. Black B., Kim W. The effect of board structure on firm value: a multiple identification strategies approach using Korean data. Journal of Financial Economics 2012, 104:203-226.
13. Bowen R., Rajgopal S., Venkatachalam M. Accounting discretion, corporate governance, and firm performance. Contemporary Accounting Research 2008, 25:351-405.
14. Brennan M., Subrahmanyam A. Investment analysis and price formation in security markets. Journal of Financial Economics 1995, 38:361-381.
15. Bushee B., Noe C. Corporate disclosure practices, institutional investors, and stock return volatility. Journal of Accounting Research 2000, 38:171-202.
16. Bushman R., Chen Q., Engel E., Smith A. Financial accounting information, organizational complexity, and corporate governance systems. Journal of Accounting and Economics 2004, 37:167-201.
17. Bushman R., Piotroski J., Smith A. Insider trading restrictions and analysts[U+05F3] incentives to follow firms. Journal of Finance 2005, 60:35-66.
18. Cai, J., Liu, Y., Qian, Y., 2009. Information asymmetry and corporate governance. Unpublished working paper. Drexel University, University of New Hampshire, and University of Iowa.
19. Chen, D., 2011. Board independence and credit ratings. Unpublished working paper. University of Baltimore.
20. Chen, X., Cheng, Q., Wang, X., 2011. Does increased board independence reduce earnings management? Evidence from recent regulatory reforms. Unpublished working paper. University of Wisconsin-Madison and The Chinese University of Hong Kong.
21. Chhaochharia V., Grinstein Y. CEO compensation and board structure. Journal of Finance 2009, 64:231-261.
22. Coles, J., Daniel, N., Naveen, L., 2007. Co-opted boards: costs, benefits, causes and consequences. Unpublished working paper. Arizona State University, Drexel University, and Temple University.
23. Core J., Holthausen R., Larcker D. Corporate governance, chief executive officer compensation, and firm performance. Journal of Financial Economics 1999, 51:371-406.
24. Dechow P., Dichev I. The quality of accruals and earnings: the role of accrual estimation errors. Accounting Review 2002, 77:35-59.
25. Duchin R., Matsusaka J., Ozbas O. When are outside directors effective?. Journal of Financial Economics 2010, 96:195-214.
26. Edlin A., Stiglitz J. Discouraging rivals: managerial rent-seeking and economic inefficiencies. American Economic Review 1995, 85:1301-1312.
27. Engel E. Discussion of Does the market value financial expertise on audit committees of boards of directors?. Journal of Accounting Research 2005, 43:195-204.
28. Fahlenbrach R., Stulz R. Bank CEO incentives and the credit crisis. Journal of Financial Economics 2011, 99:11-26.
29. Fama E., French K. Industry costs of equity. Journal of Financial Economics 1997, 43:153-193.
30. Ferreira D., Ferreira M., Raposo C. Board structure and price informativeness. Journal of Financial Economics 2011, 99:523-545.
31. Fich E., Shivdasani A. Financial fraud, director reputation, and shareholder wealth. Journal of Financial Economics 2007, 86:306-336.
32. Francis J., LaFond R., Olsson P., Schipper K. The market pricing of accruals quality. Journal of Accounting and Economics 2005, 39:295-327.
33. Gerety M., Lehn K. The causes and consequences of accounting fraud. Managerial and Decision Economics 1997, 18:587-599.
34. Goh, B., Ng, J., Yong, K., 2011. Board independence and information environment: an instrumental variable approach. Unpublished working paper. Singapore Management University.
35. Gompers P., Ishii J., Metrick A. Extreme governance: an analysis of dual-class companies in the United States. Review of Financial Studies 2010, 23:1051-1088.
36. Grullon G., Kanatas G., Weston J. Advertising breadth of ownership and liquidity. Review of Financial Studies 2004, 17:439-461.
37. Guay W., Kothari S.P., Watts R. A market-based evaluation of discretionary-accruals models. Journal of Accounting Research 1996, 34:83-105.
38. Healy P., Hutton A., Palepu K. Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary Accounting Research 1999, 16:485-520.
39. Ho D., Imai K., King G., Stuart E. Matching as a nonparametric processing for reducing model dependence in parametric causal inference. Political Analysis 2007, 15:199-236.
40. Holmstrom B. Pay without performance and the managerial power hypothesis: a comment. Journal of Corporation Law 2005, 30:703-715.
41. Iliev P. The effect of SOX Section 404: costs, earnings quality, and stock prices. Journal of Finance 2010, 65:1163-1196.
42. Jensen M. The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance 1993, 48:831-880.
43. Klein A. Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics 2002, 33:375-400.
44. Krishnan J. Audit committee quality and internal control: an empirical analysis. Accounting Review 2005, 80:649-675.
45. Lang M., Lundholm R. Corporate disclosure policy and analyst behavior. Accounting Review 1996, 71:467-492.
46. Larcker D., Ormazabal G., Taylor D. The market reaction to corporate governance regulation. Journal of Financial Economics 2011, 101:431-448.
47. Lehn, K., Patro, S., Zhao, M., 2008. Determinants of the size and composition of US corporate boards. Unpublished working paper. University of Pittsburgh.
48. Linck J., Netter J., Yang T. The determinants of board structure. Journal of Financial Economics 2008, 87:308-328.
49. Madhavan A., Richardson M., Roomans M. Why do security prices change? A transaction-level analysis of NYSE stocks. Review of Financial Studies 1997, 10:1035-1064.
50. Miller G. The press as a watchdog for accounting fraud. Journal of Accounting Research 2006, 44:1001-1033.
51. Papke L., Wooldridge J. Econometric methods for fractional response variables with an application to 401(k) plan participation rates. Journal of Applied Econometrics 1996, 11:619-632.
52. Petra S. The effects of corporate governance on the informativeness of earnings. Economics of Governance 2007, 8:129-152.
53. Rogers J., Van Buskirk A. Shareholder litigation and changes in disclosure behavior. Journal of Accounting and Economics 2009, 47:136-156.
54. Schaumann N. The Sarbanes-Oxley act: a bird[U+05F3]s-eye view. William Mitchell Law Review 2004, 30:1315-1350.
55. Shleifer A., Vishny R. Management entrenchment: the case of manager-specific investments. Journal of Financial Economics 1989, 25:123-139.
56. Srinivasan S. Consequences of financial reporting failure for outside directors: evidence from accounting restatements and audit committee members. Journal of Accounting Research 2005, 43:291-334.
57. Tucker J., Zarowin P. Does income smoothing improve earnings informativeness?. Accounting Review 2006, 81:251-270.
58. Verrecchia R. Essays on disclosure. Journal of Accounting and Economics 2001, 32:97-180.
59. Watts R., Zimmerman J. Positive Accounting Theory 1986, Prentice-Hall, Englewood Cliffs, NJ.
60. Wintoki M. Corporate boards and regulation: the effect of the Sarbanes-Oxley Act and the exchange listing requirements on firm value. Journal of Corporate Finance 2007, 13:229-250.