Bankers on Board and Conditional Conservatism: Evidence from an Information Shock
Posted: 15 Jan 2013 Last revised: 12 Nov 2015
Date Written: May 1, 2015
We exploit an informational shock to the firm information environment to examine the relationship between unaffiliated bankers on corporate boards and conditional conservatism. We find that after the information shock, firms with unaffiliated bankers on board experience a statistically and economically significant increase in conditional conservatism relative to firms without unaffiliated bankers on board. These findings hold after we account for other country-level factors that shape the demand for conditional conservatism. We further document that the role of bankers on conditional conservatism depends on firm-specific incentives arising from the contracting environment. Taken together, our results provide new insights into the role of corporate governance arrangements on financial reporting outcomes.
Keywords: Accounting Conservatism, Corporate Governance, Bankers on Boards
JEL Classification: G30, M41
Suggested Citation: Suggested Citation