Seeing is believing: Director accounting enforcement experience and financial reporting quality

IF 2.9 3区 管理学 Q2 BUSINESS, FINANCE
Silver Chung , Daniel Sejun Hwang
{"title":"Seeing is believing: Director accounting enforcement experience and financial reporting quality","authors":"Silver Chung ,&nbsp;Daniel Sejun Hwang","doi":"10.1016/j.jcae.2024.100453","DOIUrl":null,"url":null,"abstract":"<div><div>This study investigates the impact of directors’ experiences with accounting enforcement on financial reporting quality (FRQ). While firms often regard real-life experiences as a crucial factor in their hiring decisions, the actual impact of directors’ experiences on corporate decisions, particularly financial reporting decisions remains unclear. Using a difference-in-differences method, we find significant changes in a firm’s FRQ when its director experiences SEC enforcement at another firm where she serves as a director. More specifically, we find that discretionary accruals and restatement likelihood decrease while real activities manipulation increases following a director’s Accounting and Auditing Enforcement Releases (AAER) experience. Additionally, such changes are concentrated among subsamples where AAERs allege fraud or GAAP violations, or the director serves on the audit committee at the perpetrating company. Collectively, these findings show that directors’ experiences make differences in related corporate decision-making and SEC enforcement actions have disciplinary effects beyond the firms that directly face charges.</div></div>","PeriodicalId":46693,"journal":{"name":"Journal of Contemporary Accounting & Economics","volume":"21 1","pages":"Article 100453"},"PeriodicalIF":2.9000,"publicationDate":"2024-12-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Contemporary Accounting & Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1815566924000535","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0

Abstract

This study investigates the impact of directors’ experiences with accounting enforcement on financial reporting quality (FRQ). While firms often regard real-life experiences as a crucial factor in their hiring decisions, the actual impact of directors’ experiences on corporate decisions, particularly financial reporting decisions remains unclear. Using a difference-in-differences method, we find significant changes in a firm’s FRQ when its director experiences SEC enforcement at another firm where she serves as a director. More specifically, we find that discretionary accruals and restatement likelihood decrease while real activities manipulation increases following a director’s Accounting and Auditing Enforcement Releases (AAER) experience. Additionally, such changes are concentrated among subsamples where AAERs allege fraud or GAAP violations, or the director serves on the audit committee at the perpetrating company. Collectively, these findings show that directors’ experiences make differences in related corporate decision-making and SEC enforcement actions have disciplinary effects beyond the firms that directly face charges.
眼见为实:董事会计执法经验与财务报告质量
本研究探讨董事在会计执行方面的经验对财务报告质量(FRQ)的影响。虽然公司通常将现实生活经验视为其招聘决策的关键因素,但董事经验对公司决策,特别是财务报告决策的实际影响尚不清楚。使用差异中的差异方法,我们发现当其董事在其担任董事的另一家公司经历SEC执法时,公司的FRQ会发生重大变化。更具体地说,我们发现,在董事的会计和审计执法发布(AAER)经验之后,可自由支配的应计利润和重述可能性减少,而真实活动操纵增加。此外,这些变化主要集中在审计人员涉嫌欺诈或违反公认会计准则的子样本中,或者董事在犯罪公司的审计委员会任职。总的来说,这些发现表明,董事的经历对相关的公司决策产生了影响,而SEC的执法行动对直接面临指控的公司之外的公司也有纪律影响。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
求助全文
约1分钟内获得全文 求助全文
来源期刊
CiteScore
6.00
自引率
3.00%
发文量
24
×
引用
GB/T 7714-2015
复制
MLA
复制
APA
复制
导出至
BibTeX EndNote RefMan NoteFirst NoteExpress
×
提示
您的信息不完整,为了账户安全,请先补充。
现在去补充
×
提示
您因"违规操作"
具体请查看互助需知
我知道了
×
提示
确定
请完成安全验证×
copy
已复制链接
快去分享给好友吧!
我知道了
右上角分享
点击右上角分享
0
联系我们:info@booksci.cn Book学术提供免费学术资源搜索服务,方便国内外学者检索中英文文献。致力于提供最便捷和优质的服务体验。 Copyright © 2023 布克学术 All rights reserved.
京ICP备2023020795号-1
ghs 京公网安备 11010802042870号
Book学术文献互助
Book学术文献互助群
群 号:481959085
Book学术官方微信