Board Characteristics and Financial Reporting

Abstract

The past corporate accounting scandals have left the accounting profession in doubts of its integrity and relevance. Against this backdrop, we investigated the impact of board characteristics on financial reporting quality of listed manufacturing firms. The study was driven by the positivist research philosophy and a deductive research approach using a multi-method quantitative research design. Descriptive and inferential statistics were employed to summarize the data and to draw inference on the population studied. We employed the Generalized Linear Model Regression in testing the hypotheses stated. Findings revealed that board expertise was statistically significant and positively related to financial reporting quality at 5% level of significance, while board independence and board diversity was found to be insignificantly related to financial reporting quality at 5% level of significance. The study concluded that board characteristics partially affect financial reporting quality. Hence, we recommended that non-executive directors on the board should be reduced to cut excessive management cost.

Keywords: Board independence, Board diversity, Board expertise, Financial reporting quality, Normality, Generalized Linear Model Regression

JEL Classification: J3