Is future shareholder activism associated with current financial reporting quality? Evidence from the US

51 Pages Posted: 17 Apr 2019 Last revised: 9 Jul 2020

See all articles by Tom Adams

Tom Adams

La Salle University

Thaddeus Neururer

University of Akron - The George W. Daverio School of Accountancy

Date Written: July 2, 2020

Abstract

We examine whether future shareholder activism is associated with current financial reporting quality. Activism refers to actions taken by shareholders to change firm policies and practices. If issues are present in an investee’s financial reports, we expect shareholders to act to improve information quality and governance. Following prior literature, we adopt governance proposals as our measure of activism and a portfolio of measures as our proxies for financial reporting quality. Depending on specification, we find governance proposals are positively associated with abnormal audit fees, abnormal accruals, the use of a non-Big N auditor, internal control issues, and restatements.

Keywords: Shareholder Activism, Shareholder Proposals, Financial Reporting Quality

JEL Classification: G30, M41

Suggested Citation

Adams, Thomas and Neururer, Thaddeus, Is future shareholder activism associated with current financial reporting quality? Evidence from the US (July 2, 2020). Available at SSRN: https://ssrn.com/abstract=3361802 or http://dx.doi.org/10.2139/ssrn.3361802

Thomas Adams (Contact Author)

La Salle University ( email )

United States
2159511081 (Phone)

Thaddeus Neururer

University of Akron - The George W. Daverio School of Accountancy ( email )

United States

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