Do Board Secretaries Influence Management Earnings Forecasts?
52 Pages Posted: 21 Feb 2017
Date Written: February 19, 2017
The role of board secretaries is a unique institutional feature in China. Individuals in this senior executive role are responsible for coordinating information disclosure. We study the impact of board secretaries on management earnings forecasts and find that their legal expertise, accounting expertise and foreign experience helps improve management earnings forecast quality. The quality of forecasts, as indicated by their occurrence, frequency, precision and accuracy, is also positively associated with the role duality (e.g. board director, CFO or other senior executive role) and equity holdings of board secretaries, and negatively associated with their political connection. The quality of forecasts is found to increase the compensation of board secretaries. Finally, we show that the equity holding of board secretaries reduces litigation risks and increases corporate philanthropic giving.
Keywords: Board secretary; management earnings forecasts; China; top management team; litigation risk
JEL Classification: G30; M12; M41
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