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Board Characteristics' Impact on Accounting Conservatism Before and During the Financial Crisis

Author

Listed:
  • Pan Yuner

    (Amsterdam Business School, University of Amsterdam, Amsterdam, Netherlands)

  • Georgios Georgakopoulos

    (Amsterdam Business School, University of Amsterdam, Amsterdam, Netherlands)

  • Konstantinos Z. Vasileiou

    (Department of Business Administration (Patras), TEI of Western Greece, Patras, Greece)

  • Dionysios Kafousias

    (Department of Accounting & Finance, TEI of Western Greece, Patras, Greece)

Abstract

This article investigates the extent that board characteristics and board strengths influence the accounting conservatism, estimated by market-based and accrual-based measures, before and during the financial crisis. The percentage of inside directors and the additional directorships (board characteristics) were negatively related to market-based conservatism. This relationship is weaker for the period during the financial crisis compared to the period before the crisis. The negative relationship found between CEO and chairman duality and accrual-based conservatism is weaker during the financial crisis than before the crisis, which implies that the financial crisis can be considered as an important element that leads to failures and weaknesses in corporate governance mechanisms. The results hold after controlling for inside directors' ownership, leverage, firm size, sales growth, sales opportunities, profitability and litigation risk, as well as for unobservable firm characteristics that are stable over time by using fixed effects regressions.

Suggested Citation

  • Pan Yuner & Georgios Georgakopoulos & Konstantinos Z. Vasileiou & Dionysios Kafousias, 2017. "Board Characteristics' Impact on Accounting Conservatism Before and During the Financial Crisis," International Journal of Corporate Finance and Accounting (IJCFA), IGI Global, vol. 4(1), pages 35-56, January.
    • Handle: RePEc:igg:jcfa00:v:4:y:2017:i:1:p:35-56
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