Determinants and Accounting Consequences of Forming a Governance Committee: Evidence from the United States

18 Pages Posted: 17 Nov 2009

See all articles by Henry He Huang

Henry He Huang

Yeshiva University - Sy Syms School of Business

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Jian Zhou

University of Hawaii at Manoa

Abstract

This study examines a sample of S&P 1,500 firms over the period of 1996 to 2002. It finds that firms with a larger, more independent, and more active board, higher agency costs (as indicated by lower managerial ownership and lower takeover vulnerability), and past occurrence of class-action lawsuits are more likely to voluntarily form a governance committee. This study also provides evidence that having a governance committee brings real consequences in that it constrains managerial opportunism by reducing aggressive financial reporting.

Suggested Citation

Huang, Henry and Lobo, Gerald J. and Zhou, Jian, Determinants and Accounting Consequences of Forming a Governance Committee: Evidence from the United States. Corporate Governance: An International Review, Vol. 17, Issue 6, pp. 710-727, November 2009, Available at SSRN: https://ssrn.com/abstract=1505681 or http://dx.doi.org/10.1111/j.1467-8683.2009.00769.x

Henry Huang (Contact Author)

Yeshiva University - Sy Syms School of Business ( email )

New York, NY 10033
United States

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

Jian Zhou

University of Hawaii at Manoa ( email )

Honolulu, HI 96822
United States

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