Independent directors in Sweden and their influence on earnings through accounting and cash flow management

In this paper we distinguish between the two domains of monitoring arguing that CFM revolves around long-term action for corporate value creation, and ultimately affects shareholder profit, thus being at the heart of an independent directors’ duty. Empirical results indicate that the share of independent directors is positively correlated with AM and negatively with CFM and remain consistent against several robustness checks. Our theory and empirical results put into question the generally accepted notion that AM is an indicator of opportunism. It could be suggested, on the contrary, that the positive correlation with AM could be an indicator of directors’ performing their fiduciary duty of reducing information asymmetry