Accounting Papers

Document Type

Journal Article

Date of this Version

9-2014

Publication Source

Journal of Financial Economics

Volume

113

Issue

3

Start Page

383

Last Page

403

DOI

10.1016/j.jfineco.2014.05.009

Abstract

Although recent research documents a positive relation between corporate transparency and the proportion of independent directors, the direction of causality is unclear. We examine a regulatory shock that substantially increased board independence for some firms, and find that information asymmetry, and to some extent management disclosure and financial intermediation, changed at firms affected by this shock. We also examine whether these effects vary as a function of management entrenchment, information processing costs, and required changes to audit committee independence. Our results suggest that firms can alter their corporate transparency to suit the informational demands of a particular board structure.

Copyright/Permission Statement

© 2014. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

corporate governance, board of directors, corporate transparency, information asymmetry, board regulations

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Date Posted: 27 November 2017

This document has been peer reviewed.