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Board structure and earnings persistence: The mediation effect of board processes

Author

Listed:
  • Dinithi Ranasinghe

    (Department of Accountancy and Finance, School of Business, University of Otago, Dunedin, New Zealand)

  • Paul Mather
  • Suzanne Young

    (La Trobe Business School, College of Arts, Social Sciences and Commerce, La Trobe University, Melbourne, VIC, Australia)

Abstract

Prior research has overlooked board processes and examined direct links between board structure and monitoring financial reporting with mixed results. We use an input–process–output heuristic model to argue that board processes mediate the association between board structure and earnings persistence. Our results support this assertion by showing the mediating effect of board processes and the impact on managerial behaviour in relation to monitoring financial reporting. We contribute to the accounting and finance literature by demonstrating the importance of examining alternative theoretical models and board-process variables, along with structure. This article also highlights the importance of establishing best-practice guidelines around board processes in governance regulations. JEL Classification: M41, G34

Suggested Citation

  • Dinithi Ranasinghe & Paul Mather & Suzanne Young, 2020. "Board structure and earnings persistence: The mediation effect of board processes," Australian Journal of Management, Australian School of Business, vol. 45(2), pages 266-293, May.
    • Handle: RePEc:sae:ausman:v:45:y:2020:i:2:p:266-293
    DOI: 10.1177/0312896219851553
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    References listed on IDEAS

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    Cited by:

    1. Rahman, Sheehan, 2023. "Narrative tone and earnings persistence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).

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    More about this item

    Keywords

    Board processes; cognitive conflict; earnings persistence; effort norms; knowledge and skills; mediation;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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