In this study, we provide large-sample evidence on how corporate in-house human capital investments in accounting affect earnings management. We construct a dataset of more than 411,000 individual-years of corporate accountants between 2009 and 2015 and measure firms’ accounting human capital using the proportion of their accountants with Big N work experience or a CPA designation. We find that firms with higher accounting human capital have a lower probability of accounting irregularities, lower discretionary accruals, better internal control quality, and fewer unintentional accounting errors. The results hold when we control for potential endogeneity by using the staggered adoption of the CPA mobility law and the number of top accounting undergraduate programs near the firm as instrumental variables for accounting human capital. We further find that firms with higher accounting human capital exhibit stronger market reactions to earnings news and pay lower audit fees, confirming that external stakeholders perceive these firms as having better financial reporting quality.
{"title":"Corporate In-house Human Capital Investments in Accounting","authors":"Xia Chen, Q. Cheng, Travis Chow, Yanjun Liu","doi":"10.2139/ssrn.3805840","DOIUrl":"https://doi.org/10.2139/ssrn.3805840","url":null,"abstract":"In this study, we provide large-sample evidence on how corporate in-house human capital investments in accounting affect earnings management. We construct a dataset of more than 411,000 individual-years of corporate accountants between 2009 and 2015 and measure firms’ accounting human capital using the proportion of their accountants with Big N work experience or a CPA designation. We find that firms with higher accounting human capital have a lower probability of accounting irregularities, lower discretionary accruals, better internal control quality, and fewer unintentional accounting errors. The results hold when we control for potential endogeneity by using the staggered adoption of the CPA mobility law and the number of top accounting undergraduate programs near the firm as instrumental variables for accounting human capital. We further find that firms with higher accounting human capital exhibit stronger market reactions to earnings news and pay lower audit fees, confirming that external stakeholders perceive these firms as having better financial reporting quality.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124899912","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this study, we examine how banks’ stock price crash risk is affected by recourse uncertainty embedded in securitizations. By recourse uncertainty, we mean the difficulty for equity market participants to assess the true extent of risk transfer between securitizing banks and investors in asset-backed securities due to the opacity of securitizations. We argue that this uncertainty facilitates the withholding and accumulation of negative recourse news that is subsequently released at once, resulting in crashes. Using a sample of U.S. bank holding companies for the period of 2002-2015, we find that recourse uncertainty is positively associated with the future crash risk of securitizing banks. The result holds after controlling for bank intrinsic risk. We also predict and find that this association is higher for banks with poorer information environment and for the period before the adoption of SFAS 166/167, which required enhanced disclosure about securitization activities.
{"title":"Securitization, Recourse Uncertainty, and Crash Risk","authors":"Y. Dou, J. Ronen, Tuba Toksoz","doi":"10.2139/ssrn.3564768","DOIUrl":"https://doi.org/10.2139/ssrn.3564768","url":null,"abstract":"In this study, we examine how banks’ stock price crash risk is affected by recourse uncertainty embedded in securitizations. By recourse uncertainty, we mean the difficulty for equity market participants to assess the true extent of risk transfer between securitizing banks and investors in asset-backed securities due to the opacity of securitizations. We argue that this uncertainty facilitates the withholding and accumulation of negative recourse news that is subsequently released at once, resulting in crashes. Using a sample of U.S. bank holding companies for the period of 2002-2015, we find that recourse uncertainty is positively associated with the future crash risk of securitizing banks. The result holds after controlling for bank intrinsic risk. We also predict and find that this association is higher for banks with poorer information environment and for the period before the adoption of SFAS 166/167, which required enhanced disclosure about securitization activities.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132929218","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Shantanu Banerjee, S. Dasgupta, Rui Shi, Jiali Yan
We show that information complementarities play an important role in the spillover of transparency shocks. We exploit the revelation of financial misconduct by S&P 500 firms, and in a “Stacked Difference‐in‐Differences” design, find that the implied cost of capital increases for “close” industry peers of the fraudulent firms relative to “distant” industry peers. The spillover effect is particularly strong when the close peers and the fraudulent firm share common analyst coverage and common institutional ownership, which have been shown to be powerful proxies for fundamental linkages and information complementarities. We provide evidence that increase in the cost of capital of peer firms is due, at least in part, to “beta shocks” (Lambert et al. [2007], Leuz and Schrand [2009]). Disclosure by close peers – especially those with co‐coverage and co‐ownership links – also increases following fraud revelation. While disclosure remains high in the following years, the cost of equity starts to decrease.This article is protected by copyright. All rights reserved
研究表明，信息互补性在透明度冲击的溢出效应中起着重要作用。我们利用标准普尔500公司披露的财务不当行为，并在“堆叠差异-差异-差异”设计中，发现欺诈公司的“近”行业同行相对于“远”行业同行的隐含资本成本增加。当密切的同行和欺诈公司拥有共同的分析师覆盖范围和共同的机构所有权时，溢出效应尤其强烈，这已被证明是基本联系和信息互补性的有力代表。我们提供的证据表明，同行企业的资本成本增加至少部分是由于“贝塔冲击”(Lambert et al. [2007]， Leuz and Schrand[2009])。密切的同行——特别是那些有共同报道和共同所有权联系的同行——在欺诈披露后也会增加。虽然在接下来的几年里，披露率仍然很高，但股权成本开始下降。这篇文章受版权保护。版权所有
{"title":"Information Complementarities and the Dynamics of Transparency Shock Spillovers","authors":"Shantanu Banerjee, S. Dasgupta, Rui Shi, Jiali Yan","doi":"10.2139/ssrn.3755473","DOIUrl":"https://doi.org/10.2139/ssrn.3755473","url":null,"abstract":"We show that information complementarities play an important role in the spillover of transparency shocks. We exploit the revelation of financial misconduct by S&P 500 firms, and in a “Stacked Difference‐in‐Differences” design, find that the implied cost of capital increases for “close” industry peers of the fraudulent firms relative to “distant” industry peers. The spillover effect is particularly strong when the close peers and the fraudulent firm share common analyst coverage and common institutional ownership, which have been shown to be powerful proxies for fundamental linkages and information complementarities. We provide evidence that increase in the cost of capital of peer firms is due, at least in part, to “beta shocks” (Lambert et al. [2007], Leuz and Schrand [2009]). Disclosure by close peers – especially those with co‐coverage and co‐ownership links – also increases following fraud revelation. While disclosure remains high in the following years, the cost of equity starts to decrease.This article is protected by copyright. All rights reserved","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129284179","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Senlin Miao, Mengchao Ai, John (Jianqiu) Bai, Ting Chen, Amy X. Sun
In this study, we instigate whether firms proactively change their voluntary disclosure in anticipation of the spillover of their peer firms’ litigation risk. We find that focal firms facing greater ex ante spillover litigation risk reduce disclosure activities by lowering both the likelihood of issuance and the frequency of management earnings forecasts. We then show that the effect is robust and unlikely driven by some omitted correlated variables using an alternative ex ante litigation risk measure that is not related to firm characteristics. We further demonstrate that the effect is likely causal using a difference-in-differences design where an unanticipated court ruling significantly reduces certain firms’ exposure to peers’ litigation risk spillover. The results from cross-sectional analyses are also consistent with ex ante litigation risk driving the negative relation.
{"title":"The Spillover of Shareholder Litigation Risk and Corporate Voluntary Disclosure","authors":"Senlin Miao, Mengchao Ai, John (Jianqiu) Bai, Ting Chen, Amy X. Sun","doi":"10.2139/ssrn.3455567","DOIUrl":"https://doi.org/10.2139/ssrn.3455567","url":null,"abstract":"In this study, we instigate whether firms proactively change their voluntary disclosure in anticipation of the spillover of their peer firms’ litigation risk. We find that focal firms facing greater ex ante spillover litigation risk reduce disclosure activities by lowering both the likelihood of issuance and the frequency of management earnings forecasts. We then show that the effect is robust and unlikely driven by some omitted correlated variables using an alternative ex ante litigation risk measure that is not related to firm characteristics. We further demonstrate that the effect is likely causal using a difference-in-differences design where an unanticipated court ruling significantly reduces certain firms’ exposure to peers’ litigation risk spillover. The results from cross-sectional analyses are also consistent with ex ante litigation risk driving the negative relation.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"107 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132804372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study develops and tests a simple model of voluntary disclosure where managers can choose to withhold (i.e., redact) information from mandatory disclosure. We consider a setting where mandatory disclosure is a disaggregated disclosure (e.g., a financial statement), voluntary disclosure is an aggregate disclosure (e.g., an earnings forecast), and the costs of each type of disclosure are distinct. In this setting, we show that concerns about the proprietary cost of mandatory disclosure motivate managers to withhold information from mandatory disclosure and substitute voluntary disclosure. We test our predictions using a comprehensive sample of mandatory disclosures where the SEC allows the firm to redact information that would otherwise jeopardize its competitive position. Consistent with our predictions, we find strong evidence that redacted mandatory disclosure is associated with greater voluntary disclosure.
{"title":"Proprietary Costs and Disclosure Substitution: Theory and Empirical Evidence","authors":"M. Heinle, Delphine Samuels, Daniel J. Taylor","doi":"10.2139/ssrn.3173664","DOIUrl":"https://doi.org/10.2139/ssrn.3173664","url":null,"abstract":"This study develops and tests a simple model of voluntary disclosure where managers can choose to withhold (i.e., redact) information from mandatory disclosure. We consider a setting where mandatory disclosure is a disaggregated disclosure (e.g., a financial statement), voluntary disclosure is an aggregate disclosure (e.g., an earnings forecast), and the costs of each type of disclosure are distinct. In this setting, we show that concerns about the proprietary cost of mandatory disclosure motivate managers to withhold information from mandatory disclosure and substitute voluntary disclosure. We test our predictions using a comprehensive sample of mandatory disclosures where the SEC allows the firm to redact information that would otherwise jeopardize its competitive position. Consistent with our predictions, we find strong evidence that redacted mandatory disclosure is associated with greater voluntary disclosure.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"61 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131582726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
S. Anderson, Jessen L. Hobson, Ryan D. Sommerfeldt
Many companies regularly disclose non-GAAP performance measures to communicate firm-specific information that does not fit within the mold of GAAP reporting. However, these non-GAAP measures may have low information content or even be misleading to investors. Thus, some question whether auditors should play a role in the reporting of non-GAAP measures, which currently are not audited. We run an experiment to provide ex ante evidence on the effect of auditing non-GAAP measures. Specifically, we present investor participants with a non-GAAP measure that is either more useful (should be used when making investment judgments) or less useful (should not be used when making investment judgments) and is either audited or is not audited. We find that, when participants view a non-GAAP measure that is more useful, they appropriately use the non-GAAP measure in their investment-related judgments, regardless of whether the measure is audited. However, we find that, while participants appropriately do not use a less useful non-GAAP measure when it is not audited, participants inappropriately do use the less useful non-GAAP measure in their investment-related judgments when it is audited. Mediation results provide evidence consistent with audits increasing investors’ reliance on non-GAAP measures when they are less useful. Overall, our results are consistent with audits of non-GAAP measures signaling more than is intended and have implications for regulators regarding the role of auditors in non-GAAP reporting.
{"title":"Auditing Non-GAAP Measures: Signaling More Than Intended","authors":"S. Anderson, Jessen L. Hobson, Ryan D. Sommerfeldt","doi":"10.2139/ssrn.3409386","DOIUrl":"https://doi.org/10.2139/ssrn.3409386","url":null,"abstract":"Many companies regularly disclose non-GAAP performance measures to communicate firm-specific information that does not fit within the mold of GAAP reporting. However, these non-GAAP measures may have low information content or even be misleading to investors. Thus, some question whether auditors should play a role in the reporting of non-GAAP measures, which currently are not audited. We run an experiment to provide ex ante evidence on the effect of auditing non-GAAP measures. Specifically, we present investor participants with a non-GAAP measure that is either more useful (should be used when making investment judgments) or less useful (should not be used when making investment judgments) and is either audited or is not audited. We find that, when participants view a non-GAAP measure that is more useful, they appropriately use the non-GAAP measure in their investment-related judgments, regardless of whether the measure is audited. However, we find that, while participants appropriately do not use a less useful non-GAAP measure when it is not audited, participants inappropriately do use the less useful non-GAAP measure in their investment-related judgments when it is audited. Mediation results provide evidence consistent with audits increasing investors’ reliance on non-GAAP measures when they are less useful. Overall, our results are consistent with audits of non-GAAP measures signaling more than is intended and have implications for regulators regarding the role of auditors in non-GAAP reporting.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114669300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study how the assignment of property rights between employees and their employers influences disclosures that reveal the productivity and ability of individual employees. To do so, we examine the effect of a court ruling that significantly shifted the assignment of intellectual property rights from inventors to their employers, but that was otherwise likely exogenous with respect to disclosure. Using a within-firm-year difference-in-differences design estimated across a sample of multiple firms, we find that firms accelerate their patent disclosures for innovations created by their inventors affected by the ruling, relative to their patent disclosures for innovations created by their unaffected inventors. Our results suggest that the assignment of intellectual property rights and the potential for hold up problems between employees and their employers can affect disclosure decisions.
{"title":"Intellectual Property Rights, Holdup, and the Incentives for Innovation Disclosure","authors":"C. Armstrong, Stephen Glaeser, Stella Y. Park","doi":"10.2139/ssrn.3724041","DOIUrl":"https://doi.org/10.2139/ssrn.3724041","url":null,"abstract":"We study how the assignment of property rights between employees and their employers influences disclosures that reveal the productivity and ability of individual employees. To do so, we examine the effect of a court ruling that significantly shifted the assignment of intellectual property rights from inventors to their employers, but that was otherwise likely exogenous with respect to disclosure. Using a within-firm-year difference-in-differences design estimated across a sample of multiple firms, we find that firms accelerate their patent disclosures for innovations created by their inventors affected by the ruling, relative to their patent disclosures for innovations created by their unaffected inventors. Our results suggest that the assignment of intellectual property rights and the potential for hold up problems between employees and their employers can affect disclosure decisions.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"79 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134645652","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mahmoud Elmarzouky, Khaldoon Albitar, Atm Enayet Karim, Ahmed Saber Moussa
This paper provides a unique COVID-19 disclosure measurement and investigates the association between the level of COVID-19 disclosure and uncertainty within annual reports for UK FTSE-All share non-financial firms. We used automated textual analysis to score the sampled annual reports. The results show that the level of COVID-19 disclosure varies from industry to industry. Furthermore, there is a positive relationship between COVID-19 disclosure and uncertainty in annual reports. Firms with larger boards exhibit more significant uncertainty in annual reports with COVID-19 disclosure. However, the significance of uncertainty in annual reports with COVID-19 disclosure remains at the same level with different board independence percentages. The unique findings of this paper are extremely relevant to governments, shareholders, policymakers, suppliers, and creditors.
{"title":"COVID-19 Disclosure: A Novel Measurement and Annual Report Uncertainty","authors":"Mahmoud Elmarzouky, Khaldoon Albitar, Atm Enayet Karim, Ahmed Saber Moussa","doi":"10.3390/jrfm14120616","DOIUrl":"https://doi.org/10.3390/jrfm14120616","url":null,"abstract":"This paper provides a unique COVID-19 disclosure measurement and investigates the association between the level of COVID-19 disclosure and uncertainty within annual reports for UK FTSE-All share non-financial firms. We used automated textual analysis to score the sampled annual reports. The results show that the level of COVID-19 disclosure varies from industry to industry. Furthermore, there is a positive relationship between COVID-19 disclosure and uncertainty in annual reports. Firms with larger boards exhibit more significant uncertainty in annual reports with COVID-19 disclosure. However, the significance of uncertainty in annual reports with COVID-19 disclosure remains at the same level with different board independence percentages. The unique findings of this paper are extremely relevant to governments, shareholders, policymakers, suppliers, and creditors.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"80 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124621981","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We show that the stock market regularly and systematically receives information about company fundamentals through month-end reporting, even before the quarterly earnings announcement. Such cash-flow news concentrates at the beginning of a month and affects company announcements, analyst revisions, and stock returns. Using this time variation in cash-flow news, we show evidence supporting cash-flow news being more persistent than discount-rate news. Individual stock returns exhibit a post-monthly-announcement drift. Time series market momentum exists only when conditioning on past first-half month return, and is stronger when the past market-wide earnings surprise is bigger.
{"title":"Month-End Reporting, Cash-Flow News, and Asset Pricing","authors":"C. Hong, Jialin Yu","doi":"10.2139/ssrn.3685595","DOIUrl":"https://doi.org/10.2139/ssrn.3685595","url":null,"abstract":"We show that the stock market regularly and systematically receives information about company fundamentals through month-end reporting, even before the quarterly earnings announcement. Such cash-flow news concentrates at the beginning of a month and affects company announcements, analyst revisions, and stock returns. Using this time variation in cash-flow news, we show evidence supporting cash-flow news being more persistent than discount-rate news. Individual stock returns exhibit a post-monthly-announcement drift. Time series market momentum exists only when conditioning on past first-half month return, and is stronger when the past market-wide earnings surprise is bigger.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"41 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130809798","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-07-13DOI: 10.1142/s1094406021500025
Ahsan Habib, Md. Borhan Uddin Bhuiyan, J. Wu
This paper conducts a meta-analysis of 182 published archival accounting and auditing studies on the corporate governance determinants of financial restatements. We aim to provide a focused and systematic examination of various internal and external corporate governance factors that may predict financial restatements. We do so by aggregating results statistically across individual studies and correcting statistical artifacts, thereby we provide findings that are much more precise than those of narrative reviews. We categorize the chosen governance variables into (a) audit firm and audit engagement characteristics; (b) gender, board attributes, and audit committee attributes; (c) CEO related attributes; (d) ownership structure variables; and (e) external corporate governance variables, and thus we generate a total of 37 separate corporate governance variables. Our results reveal that the governance mechanisms of Big N auditor choice, types, and timeliness of audit opinions and board independence are significantly and negatively associated with the occurrence of financial restatements. However, economic bonding between auditors and their clients, insider ownership, and firm complexity all increase the likelihood of restatements significantly. We hope that our findings will make a meaningful contribution to the literature on financial restatements and corporate governance by providing insights for regulators on the governance mechanisms that may require further scrutiny in combating the occurrence of financial restatements.
{"title":"Corporate Governance Determinants of Financial Restatements: A Meta-Analysis","authors":"Ahsan Habib, Md. Borhan Uddin Bhuiyan, J. Wu","doi":"10.1142/s1094406021500025","DOIUrl":"https://doi.org/10.1142/s1094406021500025","url":null,"abstract":"This paper conducts a meta-analysis of 182 published archival accounting and auditing studies on the corporate governance determinants of financial restatements. We aim to provide a focused and systematic examination of various internal and external corporate governance factors that may predict financial restatements. We do so by aggregating results statistically across individual studies and correcting statistical artifacts, thereby we provide findings that are much more precise than those of narrative reviews. We categorize the chosen governance variables into (a) audit firm and audit engagement characteristics; (b) gender, board attributes, and audit committee attributes; (c) CEO related attributes; (d) ownership structure variables; and (e) external corporate governance variables, and thus we generate a total of 37 separate corporate governance variables. Our results reveal that the governance mechanisms of Big N auditor choice, types, and timeliness of audit opinions and board independence are significantly and negatively associated with the occurrence of financial restatements. However, economic bonding between auditors and their clients, insider ownership, and firm complexity all increase the likelihood of restatements significantly. We hope that our findings will make a meaningful contribution to the literature on financial restatements and corporate governance by providing insights for regulators on the governance mechanisms that may require further scrutiny in combating the occurrence of financial restatements.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"2 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-07-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121085311","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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