The effect of controlling shareholders' excess board seats control on financial restatements: Evidence from Taiwan

Chaur Shiuh Young, Liu Ching Tsai, Hui Wen Hsu

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)

Abstract

This study examines the relation between controlling shareholders' excess board seats control and financial restatements. An analysis of a sample comprising 106 Taiwanese listed firms (53 restating firms vs. 53 non-restating control firms) shows that financial restatements are more likely to occur when there is a greater divergence between controlling shareholders' board seats control rights and ownership rights. We also find that the excess board seats control of controlling shareholders is positively associated with the materiality and pervasiveness of financial restatements. Overall, these results suggest that the entrenchment incentive from controlling shareholders' excess control motivates firms to adopt aggressive accounting policies.

Original languageEnglish
Pages (from-to)297-314
Number of pages18
JournalReview of Quantitative Finance and Accounting
Volume30
Issue number3
DOIs
Publication statusPublished - 2008 Apr 1

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Finance

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