Accounting Conservatism and Board of Director Characteristics: an Empirical Analysis
Anwer S. Ahmed
Texas A&M University - Mays Business School
Saint Louis University - Department of Accounting
January 22, 2007
Using three different measures of conservatism, we document that (i) the percentage of inside directors is negatively related to conservatism, and (ii) the percentage of outside directors' shareholdings is positively related to conservatism. Our results hold after controlling for industry, firm size, leverage, growth opportunities, institutional ownership, inside director ownership, and unobservable firm characteristics that are stable over time. Overall, the evidence is consistent with accounting conservatism assisting directors in reducing agency costs of firms.
Number of Pages in PDF File: 52
Keywords: Accounting Conservatism, Board Independence, Outside Directors, Corporate Governance, Agency Costs
JEL Classification: G3, M41
Date posted: March 2, 2006
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