Board structure and earnings persistence: The mediation effect of board processes. Issue 2 (May 2020)

• Record Type: Journal Article
• Authors: Ranasinghe, Dinithi; Mather, Paul; Young, Suzanne
• Is Part Of: Australian journal of management. Volume 45:Issue 2(2020)
• Page Start: 266
• Page End: 293
• Publication Date: 2020-05
• Subjects: Board processes -- cognitive conflict -- earnings persistence -- effort norms -- knowledge and skills -- mediation; Management -- Periodicals; Management -- Australia -- Periodicals; Business enterprises -- Finance -- Periodicals; Industrial management -- Australia -- Periodicals; 330
• DOI: 10.1177/0312896219851553
• Languages: English
• ISSNs: 0312-8962

Abstract

Prior research has overlooked board processes and examined direct links between board structure and monitoring financial reporting with mixed results. We use an input–process–output heuristic model to argue that board processes mediate the association between board structure and earnings persistence. Our results support this assertion by showing the mediating effect of board processes and the impact on managerial behaviour in relation to monitoring financial reporting. We contribute to the accounting and finance literature by demonstrating the importance of examining alternative theoretical models and board-process variables, along with structure. This article also highlights the importance of establishing best-practice guidelines around board processes in governance regulations. JEL Classification:M41, G34