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Directors' Informational Role in Corporate Voluntary Disclosure: An Analysis of Directors from Related Industries†

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  • Ruihao Ke
  • Meng Li
  • Yuan Zhang

Abstract

Boards of directors play their role in corporate governance by advising and/or monitoring managers. In the corporate disclosure literature, prior research has documented directors' monitoring role, yet empirical evidence on directors' advising role is limited. Since the advising role often entails information transfer, we examine directors who concurrently serve as directors or executives in the firms' related industries (DRIs) and hence possess valuable information about the firms' external operating environment. We hypothesize and find that more DRIs on boards are associated with more accurate management forecasts. This association is stronger when firms face greater uncertainty, and holds in settings where DRIs are unlikely to monitor managers, suggesting a distinct advising role of DRIs. Our study highlights directors' role as information suppliers and advisors who help shape corporate voluntary disclosure. Rôle informationnel des administrateurs dans la communication d'information facultative : le cas des administrateurs de secteurs connexes En matière de gouvernance d'entreprise, les conseils d'administration jouent leur rôle en conseillant les dirigeants et (ou) en exerçant sur eux une surveillance. Parmi les écrits portant sur la communication d'information par les entreprises, de précédentes études ont mis en évidence le rôle de surveillance des administrateurs, mais les données empiriques relatives à leur rôle de conseil sont limitées. Puisque le rôle de conseil suppose souvent un transfert d'information, les auteurs s'intéressent aux administrateurs qui jouent de front les rôles d'administrateurs ou de cadres dans des sociétés de secteurs connexes (ASC) et possèdent donc de précieux renseignements au sujet de l'environnement d'exploitation externe de ces sociétés. Ils émettent et confirment l'hypothèse selon laquelle la présence d'un plus grand nombre d'ASC au sein des conseils d'administration est associée à une exactitude accrue des prévisions de la direction. Cette association est plus marquée lorsque les sociétés sont exposées à davantage d'incertitude, et elle se maintient dans les circonstances où les ASC sont peu susceptibles d'exercer une surveillance sur les dirigeants, ce qui laisse supposer l'existence d'un rôle de conseil distinct des ASC. L'étude met en lumière le rôle des administrateurs à titre de fournisseurs d'informations et de conseillers contribuant à établir le profil de la communication d'information facultative par les sociétés.

Suggested Citation

  • Ruihao Ke & Meng Li & Yuan Zhang, 2020. "Directors' Informational Role in Corporate Voluntary Disclosure: An Analysis of Directors from Related Industries†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(1), pages 392-418, March.
  • Handle: RePEc:wly:coacre:v:37:y:2020:i:1:p:392-418
    DOI: 10.1111/1911-3846.12522
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    References listed on IDEAS

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