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Nonstationarity in the relationship between corporate governance and accounting conservatism

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  • Robert Kieschnick
  • Wenyun Shi

Abstract

Noe and Rebello (2012) argue that a firm's environment is not stationary and, as a result, the relationships between corporate governance and firm behavior change to adapt to changes in its environment. We provide evidence that a legal shock (Sarbanes–Oxley Act) and an economic shock (2007/2008 financial crisis) induced changes in the relationships between different corporate governance features and a firm's tendency to report conservatively. Additionally, we provide evidence on the weakness of fixed effects panel regressions to fully understand the effects of various corporate governance features on a firm's tendency to report conservatively.

Suggested Citation

  • Robert Kieschnick & Wenyun Shi, 2021. "Nonstationarity in the relationship between corporate governance and accounting conservatism," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(3-4), pages 463-497, March.
    • Handle: RePEc:bla:jbfnac:v:48:y:2021:i:3-4:p:463-497
    DOI: 10.1111/jbfa.12488
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    References listed on IDEAS

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    Cited by:

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    2. Yu, Zhen & Luo, Juncheng & Fan, Jinqi, 2024. "Bank loan approval standards and firms’ accounting conservatism: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PB).

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