Associations between Internal and External Corporate Governance Characteristics: Implications for Investigating Financial Accounting Restatements

ABSTRACT

Empirical analysis in this study documents changes in the corporate governance characteristics, and changes in associations between governance characteristics, during the period 1997 to 2005. Further investigation indicates that corporate governance characteristics and the probability of financial accounting restatement are related in 2005, but not 1997. Finally, we demonstrate the importance of considering interactions among governance characteristics when investigating governance as a determinant of financial reporting quality. These results inform thinking about empirical investigations of associations between corporate governance characteristics and financial accounting restatements.

William R. Baber is a Professor at Georgetown University, Lihong Liang is an Assistant Professor at Syracuse University, and Zinan Zhu is an Assistant Professor at the National University of Singapore.

Source : William R. Baber, Lihong Liang, and Zinan Zhu (2012) Associations between Internal and External Corporate Governance Characteristics: Implications for Investigating Financial Accounting Restatements. Accounting Horizons: June 2012, Vol. 26, No. 2, pp. 219-237.