Accounting conservatism and banking expertise on board of directors

Tri Tri Nguyen; C. Duong; Nguyet Nguyen; Hung Bui

doi:10.1007/s11156-019-00851-2

Accounting conservatism and banking expertise on board of directors

Tri Tri Nguyen, C. Duong, Nguyet Nguyen, Hung Bui

Research output: Contribution to journal › Article › peer-review

Abstract

Previous studies show mixed evidence of the role of banking expertise on the board of directors on accounting conservatism. In this paper, we add to this growing literature by providing an innovative way to measure banking expertise based on life-time working history in banks of all individual directors on the board. We find that accounting conservatism is negatively affected by banking expertise on the board. Also, the results indicate that banking expertise on the board has a more pronounced impact on accounting conservatism when firms have high bankruptcy risk and when firms have high financial leverage. The evidence has some implications for boards of directors.

Original language	English
Pages (from-to)	501–539
Journal	Review of Quantitative Finance and Accounting
Volume	55
DOIs	https://doi.org/10.1007/s11156-019-00851-2
Publication status	Published - 3 Nov 2019

Keywords

Accounting Conservatism
Banking Expertise
Boards of Directors

Access to Document

10.1007/s11156-019-00851-2

Cite this

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title = "Accounting conservatism and banking expertise on board of directors",

abstract = "Previous studies show mixed evidence of the role of banking expertise on the board of directors on accounting conservatism. In this paper, we add to this growing literature by providing an innovative way to measure banking expertise based on life-time working history in banks of all individual directors on the board. We find that accounting conservatism is negatively affected by banking expertise on the board. Also, the results indicate that banking expertise on the board has a more pronounced impact on accounting conservatism when firms have high bankruptcy risk and when firms have high financial leverage. The evidence has some implications for boards of directors.",

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AB - Previous studies show mixed evidence of the role of banking expertise on the board of directors on accounting conservatism. In this paper, we add to this growing literature by providing an innovative way to measure banking expertise based on life-time working history in banks of all individual directors on the board. We find that accounting conservatism is negatively affected by banking expertise on the board. Also, the results indicate that banking expertise on the board has a more pronounced impact on accounting conservatism when firms have high bankruptcy risk and when firms have high financial leverage. The evidence has some implications for boards of directors.

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