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Board diversity and financial statement comparability: evidence from China

Board diversity and financial statement comparability: evidence from China We investigate the relationship between board diversity (relation-oriented diversity, task-oriented diversity, and overall board diversity) and financial statement comparability. We find that diverse boards are positively associated with financial statement comparability, suggesting that board diversity improves governance mechanisms by alleviating agency conflicts, leading to higher comparability than homogenous boards. We also find that institutional ownership positively affects the association between board diversity and financial statement comparability. Furthermore, the positive effect of diversity, institutional ownership, and comparability are more pronounced in non-state-owned firms and non-crisis periods. Our findings remain consistent with a battery of econometric techniques and measures of comparability. This study provides new insights regarding the role of boardroom diversity in shaping the qualitative aspect of financial reporting, i.e., financial statement comparability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Eurasian Business Review Springer Journals

Board diversity and financial statement comparability: evidence from China

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Publisher
Springer Journals
Copyright
Copyright © The Author(s) under exclusive licence to Eurasia Business and Economics Society 2022
ISSN
1309-4297
eISSN
2147-4281
DOI
10.1007/s40821-022-00214-3
Publisher site
See Article on Publisher Site

Abstract

We investigate the relationship between board diversity (relation-oriented diversity, task-oriented diversity, and overall board diversity) and financial statement comparability. We find that diverse boards are positively associated with financial statement comparability, suggesting that board diversity improves governance mechanisms by alleviating agency conflicts, leading to higher comparability than homogenous boards. We also find that institutional ownership positively affects the association between board diversity and financial statement comparability. Furthermore, the positive effect of diversity, institutional ownership, and comparability are more pronounced in non-state-owned firms and non-crisis periods. Our findings remain consistent with a battery of econometric techniques and measures of comparability. This study provides new insights regarding the role of boardroom diversity in shaping the qualitative aspect of financial reporting, i.e., financial statement comparability.

Journal

Eurasian Business ReviewSpringer Journals

Published: May 12, 2022

Keywords: Financial statement comparability; Relation diversity; Task diversity; China

References