Abstract
AbstractI examine the relation between the quality of non‐generally accepted accounting principles (GAAP) earnings disclosures and the number of external directorships held by a firm's independent audit committee chair (ACC). I find that firms with ACCs holding more external directorships provide higher quality non‐GAAP disclosures than those who do not hold outside board positions. When the ACC has at least one external directorship, the firm's non‐GAAP exclusions are more transitory, indicating that they are of higher quality. In addition, when the ACC has at least one external directorship, non‐GAAP exclusions that are incremental to those excluded by analysts are smaller in magnitude and therefore are less aggressive. Overall, the results suggest that the number of external directorships ACCs holds plays an important role in firms’ non‐GAAP disclosures. The results are consistent with a reputation cost perspective, where ACCs with more external directorships face higher reputation concerns from having more to lose, resulting in stronger monitoring and thus higher quality non‐GAAP disclosures.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
