Does Investor Protection Regime Affect the Effectiveness of Outside Directorship on the Board?

Journal of Multinational Financial Management, November 2012

Posted: 24 Jan 2013

See all articles by Jag Pathak PhD, CPA, CGA, CFF, CFE, CISA

Jag Pathak PhD, CPA, CGA, CFF, CFE, CISA

University of Windsor - Odette School of Business

Jerry Y. Sun

University of Windsor - Odette School of Business

Date Written: February 1, 2011

Abstract

Since the Sarbanes-Oxley Act was enacted in U.S., there has been a general tendency to globally harmonize regulations and practices of board governance. The purpose of this study is to compare among countries how well the board of directors constrains earnings management. Using a sample of firms from 23 countries, we document some evidence that higher outside directorship on the board is associated with lower earnings management in the international context. We also find that there is no significant difference in the effectiveness of board outside directorship in constraining earnings management between high and low investor protection countries. Our findings mitigate a concern that harmonized corporate governance in low investor protection countries may not work.

Keywords: Sarbanes-Oxley, outside directorship, corporate governance

JEL Classification: G3, K2, M4

Suggested Citation

Pathak Phd, CPA, CGA, CFF, CFE, CISA, Jagdish and Sun, Jerry Y., Does Investor Protection Regime Affect the Effectiveness of Outside Directorship on the Board? (February 1, 2011). Journal of Multinational Financial Management, November 2012, Available at SSRN: https://ssrn.com/abstract=2206059

Jagdish Pathak Phd, CPA, CGA, CFF, CFE, CISA (Contact Author)

University of Windsor - Odette School of Business ( email )

401 Sunset
Windsor N9B 3P4, Ontario
Canada
519-253-3000 ext. 3131 (Phone)
519-973-7073 (Fax)

HOME PAGE: http://odette.uwindsor.ca/Jagdish-pathak

Jerry Y. Sun

University of Windsor - Odette School of Business ( email )

401 Sunset
Windsor N9B 3P4, Ontario
Canada
519-2533000-3122 (Phone)

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