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Co-opted boards and earnings management: Evidence of reduced short-termist behavior.
- Source :
-
Business Research Quarterly . Jul2023, Vol. 26 Issue 3, p256-280. 25p. - Publication Year :
- 2023
-
Abstract
- This study contributes to the emerging literature on board co-option by examining how and to what extent co-opted directors influence managers' attitudes about earnings management. We find robust evidence that co-option mitigates both real activities and accrual-based earnings management. Our findings support the view that higher co-option reduces managerial short-termism because it enhances managers' job security as co-opted directors are known to be less likely to remove managers from office. Our results are robust to different measures of both co-option and earnings management, and they continue to hold after accounting for endogeneity and selection concerns. Finally, we provide additional evidence showing that a higher degree of co-option lowers the likelihood of the chief executive officer (CEO) being forcefully removed from the office for managing earnings in the previous year. JEL CLASSIFICATION G30; G34; G39 [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 23409436
- Volume :
- 26
- Issue :
- 3
- Database :
- Academic Search Index
- Journal :
- Business Research Quarterly
- Publication Type :
- Academic Journal
- Accession number :
- 164130093
- Full Text :
- https://doi.org/10.1177/2340944420987572