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Co-opted boards and the obfuscation of financial reports

Tunyi Tunyi Abongeh Orcid Logo, Tanveer Hussain, Geofry Areneke, Jacob Agyemang

Abacus

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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Abstract

This study investigates the relationship between board co-option and the obfuscation of financial disclosures in a comprehensive sample of 9,620 10-K filings by 1,076 U.S.-listed firms between 1996 and 2018. Our empirical results are consistent with our hypotheses that board co-option partly explain...

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Published in: Abacus
ISSN: 0001-3072 1467-6281
Published: Wiley
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URI: https://cronfa.swan.ac.uk/Record/cronfa67607
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first_indexed 2024-09-09T07:15:13Z
last_indexed 2024-09-09T07:15:13Z
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spelling v2 67607 2024-09-09 Co-opted boards and the obfuscation of financial reports eefe2792c8eed5b49feede33981dfa53 0000-0002-5761-931X Tunyi Tunyi Abongeh Tunyi Tunyi Abongeh true false 2024-09-09 CBAE This study investigates the relationship between board co-option and the obfuscation of financial disclosures in a comprehensive sample of 9,620 10-K filings by 1,076 U.S.-listed firms between 1996 and 2018. Our empirical results are consistent with our hypotheses that board co-option partly explains the obfuscation of financial reports. Ex-post tests reveal that the co-option effect is most pronounced in firms led by less-able managers and is attenuated in the presence of a female CEO. Our findings are consistent with a stakeholder-agency perspective as they suggest that board capture weakens the ability of directors to discharge their fiduciary duties, particularly the provision of readable financial statements to stakeholders. Our results are robust to the use of alternative co-option measures, obfuscation metrics, model specifications, and potential endogeneity concerns. Overall, we contribute to the growing literature on financial statement readability by underscoring the critical role of effective monitoring in shaping the quality of firms' communication with stakeholders. Our results have important implications for governance regulation and policy. Journal Article Abacus Wiley 0001-3072 1467-6281 0 0 0 0001-01-01 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University Not Required 2024-09-09T08:15:14.0327901 2024-09-09T08:11:23.6257056 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Tunyi Tunyi Abongeh 0000-0002-5761-931X 1 Tanveer Hussain 2 Geofry Areneke 3 Jacob Agyemang 4
title Co-opted boards and the obfuscation of financial reports
spellingShingle Co-opted boards and the obfuscation of financial reports
Tunyi Tunyi Abongeh
title_short Co-opted boards and the obfuscation of financial reports
title_full Co-opted boards and the obfuscation of financial reports
title_fullStr Co-opted boards and the obfuscation of financial reports
title_full_unstemmed Co-opted boards and the obfuscation of financial reports
title_sort Co-opted boards and the obfuscation of financial reports
author_id_str_mv eefe2792c8eed5b49feede33981dfa53
author_id_fullname_str_mv eefe2792c8eed5b49feede33981dfa53_***_Tunyi Tunyi Abongeh
author Tunyi Tunyi Abongeh
author2 Tunyi Tunyi Abongeh
Tanveer Hussain
Geofry Areneke
Jacob Agyemang
format Journal article
container_title Abacus
institution Swansea University
issn 0001-3072
1467-6281
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 0
active_str 0
description This study investigates the relationship between board co-option and the obfuscation of financial disclosures in a comprehensive sample of 9,620 10-K filings by 1,076 U.S.-listed firms between 1996 and 2018. Our empirical results are consistent with our hypotheses that board co-option partly explains the obfuscation of financial reports. Ex-post tests reveal that the co-option effect is most pronounced in firms led by less-able managers and is attenuated in the presence of a female CEO. Our findings are consistent with a stakeholder-agency perspective as they suggest that board capture weakens the ability of directors to discharge their fiduciary duties, particularly the provision of readable financial statements to stakeholders. Our results are robust to the use of alternative co-option measures, obfuscation metrics, model specifications, and potential endogeneity concerns. Overall, we contribute to the growing literature on financial statement readability by underscoring the critical role of effective monitoring in shaping the quality of firms' communication with stakeholders. Our results have important implications for governance regulation and policy.
published_date 0001-01-01T08:15:13Z
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