This thesis background focuses on the growing body of literature examining how
governance mechanisms affect the quality of reported earnings. This thesis highlights
that board of directors play a crucial role in corporate governance, as they control and
advise management teams on financial information processes, that help stakeholders
make informed decisions about firms. To date, previous research on the causes and
effects of governance mechanisms assumes that these mechanisms operate
independently. However, since multiple mechanisms are used to align the interests of
shareholders and managers, this thesis proposes that the level of one mechanism
should be influenced by the levels of other mechanisms operating concurrently within
the firm. Thus, this thesis examines the moderating effect of board characteristics,
specifically board diversity and board role, and develops a theoretical framework to
explain how board characteristics influence accounting information quality.
This thesis uses fixed-effects regression analysis of a sample of 13,522 firm-year
observations in six developed economies: Australia, Singapore, Hong Kong, Canada,
the US, and the UK. This research finds that the composition of the board of directors
in terms of diversity and roles has a substantial effect on earnings quality. They play
substitutive and complementary roles that influence the company’s earnings quality.
Such findings should aid regulators and policymakers in developing governance
mechanisms that enhance the quality of financial information.
This thesis makes substantial contributions to numerous academic and professional
fields. Regarding theoretical contributions, this study incorporates multiple theoretical
perspectives, such as human capital theory, agency theory, and resource dependence
theory, to better interpret the impact of board of directors’ characteristics on corporate
outcomes. Regarding methodological contributions, this study creates combined
board diversity indices in order to investigate this topic from a holistic view. This
thesis also interprets moderated regression models using a significant interpretive tool,
viz. the marginal effect graph.
| Date of Award | 23 Feb 2024 |
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| Original language | English |
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| Awarding Institution | - University Of Strathclyde
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| Supervisor | Julia Smith (Supervisor) & Leilei Tang (Supervisor) |
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