Financial Accounting Information, Organizational Complexity and Corporate Governance Systems

Journal of Accounting and Economics 37 (2004), 167-201

41 Pages Posted: 13 Oct 2000 Last revised: 7 Sep 2017

See all articles by Robert M. Bushman

Robert M. Bushman

University of North Carolina Kenan-Flagler Business School

Qi Chen

Duke University - Fuqua School of Business

Ellen Engel

University of Illinois at Chicago - College of Business Administration

Abbie J. Smith

University of Chicago - Booth School of Business

Date Written: September 1, 2003

Abstract

We posit that limited transparency of firms’ operations to outside investors increases demands on governance systems to alleviate moral hazard problems. We investigate how ownership concentration, directors’ and executive’s incentives, and board structure vary with: 1) earnings timeliness, and 2) organizational complexity measured as geographic and/or product line diversification. We find that ownership concentration, directors’ and executives’ equity-based incentives, and outside directors’ reputations vary inversely with earnings timeliness, and that ownership concentration, and directors’ equity-based incentives increase with firm complexity. However, board size and the percentage of inside directors do not vary significantly with earnings timeliness or firm complexity.

Keywords: Corporate governance, corporate transparency, earnings timeliness, organizational complexity, diversification

JEL Classification: G30, M41, J33

Suggested Citation

Bushman, Robert M. and Chen, Qi and Engel, Ellen and Smith, Abbie J., Financial Accounting Information, Organizational Complexity and Corporate Governance Systems (September 1, 2003). Journal of Accounting and Economics 37 (2004), 167-201. Available at SSRN: https://ssrn.com/abstract=241939 or http://dx.doi.org/10.2139/ssrn.241939

Robert M. Bushman

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-9809 (Phone)

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/bushmanr/

Qi Chen

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
(919) 660-7753 (Phone)

Ellen Engel (Contact Author)

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States
312-413-3418 (Phone)

Abbie J. Smith

University of Chicago - Booth School of Business ( email )

1101 East 58th Street
Graduate School of Business
Chicago, IL 60637-1561
United States
773-702-7295 (Phone)
773-702-0458 (Fax)

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