The Effect of Board Independence on the Information Environment and Information Asymmetry
Publication Type
Conference Paper
Publication Date
8-2012
Abstract
Our paper examines how the independence of a firm’s board affects its information environment in terms of earnings quality, management forecast frequency, analyst coverage, and information asymmetry among investors. Using board connections (defined as the fraction of directors who also sit on at least one other firm’s board that has a majority of independent directors) as our instrument of board independence, we show that greater board independence leads to higher earnings quality, greater management forecast frequency, and broader analyst coverage. We also show that these outcomes mediate the effect of board independence in reducing information asymmetry among investors in the equity markets.
Discipline
Accounting | Corporate Finance
Research Areas
Corporate Reporting and Disclosure
Publication
American Accounting Association Annual Meeting
City or Country
Washington DC, USA
Citation
NG, Jeffrey; GOH, Beng Wee; and OW YONG, Kevin.
The Effect of Board Independence on the Information Environment and Information Asymmetry. (2012). American Accounting Association Annual Meeting.
Available at: https://ink.library.smu.edu.sg/soa_research/1006