Accountability and Value Enhancement Roles of Corporate Governance

29 Pages Posted: 8 Jun 2007

See all articles by Ping-Sheng Koh

Ping-Sheng Koh

ESSEC Business School

Stacie Kelley Laplante

University of Wisconsin - Madison

Yen H. Tong

Nanyang Technological University (NTU) - Nanyang Business School

Abstract

We examine the twin roles of accountability and value enhancement of corporate governance in the context of financial reporting. We investigate the accountability role by examining the association between governance structures and abnormal accruals, and the value enhancement role by investigating the association between abnormal accruals explained by governance structures and future performance. We differentiate between governance mechanisms that have direct roles in the financial reporting process (audit related) from mechanisms that have indirect roles (board related). We find that independent and active audit committees and independent boards are important governance attributes for financial reporting. We show that both audit-related and board-related governance structures are value enhancing.

Suggested Citation

Koh, Ping-Sheng and Laplante, Stacie Kelley and Tong, Yen H., Accountability and Value Enhancement Roles of Corporate Governance. Accounting and Finance, Vol. 47, No. 2, pp. 305-333, June 2007, Available at SSRN: https://ssrn.com/abstract=991970 or http://dx.doi.org/10.1111/j.1467-629X.2006.00207.x

Ping-Sheng Koh (Contact Author)

ESSEC Business School ( email )

5 Nepal Park
139408
Singapore
+65 6413 9737 (Phone)

Stacie Kelley Laplante

University of Wisconsin - Madison ( email )

975 University Avenue
Madison, WI 53706
United States
608-265-3494 (Phone)
608-265-3494 (Fax)

Yen H. Tong

Nanyang Technological University (NTU) - Nanyang Business School ( email )

Singapore 639798
Singapore
65-6790-5743 (Phone)

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