Shareholder Rights, Corporate Governance and Accounting Restatement
William R. Baber
Georgetown University - Department of Accounting and Business Law
George Washington University - School of Business
National University of Singapore
February 1, 2009
This study investigates associations between accounting restatements and statutory and corporate charter provisions that limit shareholder participation in the governance process. The analysis indicates that characteristics of strong external governance (fewer restrictions on shareholder participation) are associated with relatively low probabilities of accounting restatement. These results are robust when we consider both alternative external governance measures and when we control for internal governance characteristics frequently advanced by governance experts and imposed by regulators. If accounting restatements indicate management behavior that contradicts shareholder interests, and if the policy objective is to discourage such behavior, then the evidence supports policy that encourages shareholder participation in the governance process.
Number of Pages in PDF File: 52
Keywords: Corporate governance, Strong board, External Governance, Accounting Restatement
JEL Classification: G34, M41, M43working papers series
Date posted: July 26, 2005 ; Last revised: February 22, 2012
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