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Conference Paper: Board interlocks and earnings management contagion
Title | Board interlocks and earnings management contagion |
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Authors | |
Keywords | Earnings management Restatements Board interlocks Social networks Contagion |
Issue Date | 2011 |
Publisher | American Accounting Association. |
Citation | The 2011 Annual Meeting of the American Accounting Association, Denver, CO., 6-10 August 2011. How to Cite? |
Abstract | We test whether earnings management spreads from firm to firm via board connections of shared directors. We find evidence of earnings management contagion in firms with interlocked boards. A firm sharing a common director with an earnings manipulator is more likely to manage earnings. The contagion is stronger when the shared director has a leadership position (e.g. board chair or audit committee chair) or an accounting-relevant position (audit committee member) in the susceptible firm. Contagion effects are not due to reverse causality effects, common industry shocks, geographical proximity, or common auditor firm. Contagion effects exacerbate earnings management incentives, such as M&A activities or situations associated with accounting fraud. Overall, the evidence supports the idea that economic behaviors such as earnings manipulation also spread through private social networks, and not just through public information channels. |
Description | Conference Theme: Engage to make a difference Session Title: Intra-industry Information and Earnings Management |
Persistent Identifier | http://hdl.handle.net/10722/140783 |
DC Field | Value | Language |
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dc.contributor.author | Chiu, PC | en_US |
dc.contributor.author | Teoh, SH | en_US |
dc.contributor.author | Tian, F | en_US |
dc.date.accessioned | 2011-09-23T06:19:00Z | - |
dc.date.available | 2011-09-23T06:19:00Z | - |
dc.date.issued | 2011 | en_US |
dc.identifier.citation | The 2011 Annual Meeting of the American Accounting Association, Denver, CO., 6-10 August 2011. | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/140783 | - |
dc.description | Conference Theme: Engage to make a difference | - |
dc.description | Session Title: Intra-industry Information and Earnings Management | - |
dc.description.abstract | We test whether earnings management spreads from firm to firm via board connections of shared directors. We find evidence of earnings management contagion in firms with interlocked boards. A firm sharing a common director with an earnings manipulator is more likely to manage earnings. The contagion is stronger when the shared director has a leadership position (e.g. board chair or audit committee chair) or an accounting-relevant position (audit committee member) in the susceptible firm. Contagion effects are not due to reverse causality effects, common industry shocks, geographical proximity, or common auditor firm. Contagion effects exacerbate earnings management incentives, such as M&A activities or situations associated with accounting fraud. Overall, the evidence supports the idea that economic behaviors such as earnings manipulation also spread through private social networks, and not just through public information channels. | en_US |
dc.language | eng | en_US |
dc.publisher | American Accounting Association. | - |
dc.relation.ispartof | Annual Meeting of the American Accounting Association | en_US |
dc.subject | Earnings management | - |
dc.subject | Restatements | - |
dc.subject | Board interlocks | - |
dc.subject | Social networks | - |
dc.subject | Contagion | - |
dc.title | Board interlocks and earnings management contagion | en_US |
dc.type | Conference_Paper | en_US |
dc.identifier.email | Tian, F: ftian@hku.hk | en_US |
dc.identifier.authority | Tian, F=rp01098 | en_US |
dc.description.nature | link_to_OA_fulltext | - |
dc.identifier.hkuros | 194937 | en_US |
dc.publisher.place | United States | - |
dc.description.other | The 2011 Annual Meeting of the American Accounting Association, Denver, CO., 6-10 August 2011. | - |