Abstract
This study examines the effect of the presence of foreign experts on a company’s board on the important characteristic of high-quality financial reporting: timeliness. We focus on experts with foreign experience (EFEs) who are board members, in the context of a dual board model. The sample is drawn from the population of Polish nonfinancial firms listed on the Warsaw Stock Exchange during 2010–2015. For analysis, we use the generalised method of moments with fixed effects. After controlling for corporate governance and firm characteristics, we find that the presence of EFEs shortens the time necessary to deliver financial reports. Our findings enrich the knowledge on the monitoring role of EFEs in corporate governance, especially in the context of the insider model of corporate governance and a dual board structure. The findings have significant implications for policy formulation and provide evidence that the presence of EFEs on supervisory boards may lead to increased timeliness of financial reporting, thus increasing financial reporting quality.
Highlights
This study examines the effect of the presence of board members with foreign experience on the timeliness of financial reporting
We argue that experts with foreign experience (EFEs) which include international board members and board members with at least five years of international experience, can bring greater emphasis to the supervisory boards’ controlling role and may be better able to monitor management policies eventually leading to better timeliness of financial reporting and the higher financial reporting quality (FRQ)
The earlier two papers focus on examining whether international experts on boards affect some dimension of earnings quality, whereas we focus on the timely delivery of financial information to the capital market participants
Summary
This study examines the effect of the presence of board members with foreign experience on the timeliness of financial reporting. Timeliness is considered an important factor of relevant financial information (EU 2010; IASB 2010), and it can be. There is an inverse relationship between the time taken to prepare financial statements and information value (Knechel and Sharma 2012; Sultana 2015; Abernathy et al 2017). The longer it takes to prepare audited financial statements, the stronger the signal transmitted to the market that there may be negative issues arising related to the preparation of readyto-be-released financial statements
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