Do Non-Staggered Board Elections Matter to Earnings Quality and the Value Relevance of Earnings and Book Value?
Posted: 14 Jul 2016
Date Written: July 13, 2016
This study examines the moderating impact of board of director elections and corporate governance on (a) the relationship between discretionary accruals and earnings quality, and (b) the relative value relevance of earnings and book value on stock valuation. The importance of effective mechanisms monitoring management is well-known, with monitoring mechanisms including the board of directors and other aspects of corporate governance. We used a sample of Taiwanese firms whose board was elected every three years from 2003 to 2013. While elections led to lower earnings quality, having better corporate governance led to greater earnings quality. Our results show that earnings have reduced value relevance, while book value had increased value relevance in the presence of board elections. Finally, given board elections, the relative value relevance of EPS and BV on stock price was not fully moderated by strong corporate governance.
Keywords: Non-Staggered Board, Board Elections, Earnings Quality, Value Relevance
JEL Classification: M4, G3
Suggested Citation: Suggested Citation