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External Corporate Governance and Misreporting

48 Pages Posted: 26 Jul 2005 Last revised: 24 Jun 2016

William R. Baber

Georgetown University - Department of Accounting and Business Law

Sok-Hyon Kang

George Washington University - School of Business

Lihong Liang

Syracuse University

Zinan Zhu

National University of Singapore

Date Written: November 6, 2013

Abstract

This study investigates associations between accounting restatements and external corporate governance considered as statutory and corporate charter provisions that limit shareholder participation in the governance process. The analysis indicates that characteristics of strong external governance (fewer restrictions on shareholder participation) are associated with relatively low probabilities of accounting restatement. These results are robust both when we control for internal governance characteristics frequently advanced by governance experts and imposed by regulators, and when we consider alternative external governance measures.

Keywords: Corporate Governance, Strong board, External Governance, Accounting Restatement

JEL Classification: G34, M41, M43

Suggested Citation

Baber, William R. and Kang, Sok-Hyon and Liang, Lihong and Zhu, Zinan, External Corporate Governance and Misreporting (November 6, 2013). Georgetown McDonough School of Business Research Paper No. 760324. Available at SSRN: https://ssrn.com/abstract=760324 or http://dx.doi.org/10.2139/ssrn.760324

William R. Baber (Contact Author)

Georgetown University - Department of Accounting and Business Law ( email )

McDonough School of Business
Washington, DC 20057
United States

Sok-Hyon Kang

George Washington University - School of Business ( email )

405 Government Hall
GWU
Washington, DC 20052
United States
(202) 994-6058 (Phone)
(202) 994-5164 (Fax)

Lihong Liang

Syracuse University ( email )

Whitman School of Management
Syracuse, NY 13244
United States

Zinan Zhu

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 119245
Singapore

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