Board Monitoring and Antitakeover Amendments

McWilliams, Victoria B.; Sen, Nilanjan

doi:10.2307/2331234

Cited by 74 publications

(36 citation statements)

References 20 publications

(30 reference statements)

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“…Fama (1980) and Fama and Jensen (1983) argue that outside directors are equipped with intellectual abilities and skills so they will maintain their reputation by conducting effective monitoring of the company's performance. In addition, other studies (Brickley, Coles & Terry, 1997;McWilliams & Sen, 1997) support the expectation that boards will be effective in helping to protect shareholders' wealth if they have a higher proportion of outside directors because outside directors can make independent judgments uninfluenced by management and opportunities. However, other studies (Chtroutou, Bedard & Courteaul, 2001;Park & Shin, 2004;Ebrahim, 2007) have yielded inconsistent results about earnings management and the independence of directors.…”

Section: Independence Of the Board Of Directorsmentioning

confidence: 94%

Board Monitoring, Management Contracting and Earnings Management: An Evidence from ASX Listed Companies

Liu¹

2012

IJEF

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This study investigates the influence of board monitoring and management contracting on earnings management. The strengthening of corporate governance following the Enron era was designed to gain investors' confidence and ensure the truthfulness of financial information. Contracting is employed as an instrument to align the interests of agents with those of shareholders which are ultimately to maximise the value and minimise monitoring costs. By developing measures of board monitoring in accordance with the Corporate Governance Principles and Recommendations (CGPR) released by the Australian Securities Exchange (ASX) Corporate Governance Council (2009) and management contracting, this study presents evidence in an Australian context that both board monitoring and management contacting influence the extent of earnings management individually and collectively. Using a sample of 138 ASX listed companies, this study finds that discretionary accruals have shown various patterns across a range of observation periods. A higher incidence of CEO duality is significantly related to lower levels of earnings management. The independence of the boards is associated with higher levels of earnings management. The results show that managerial ownership has a positive effect on discretionary accruals. Furthermore, the impact of managerial ownership outweighs the impact of board monitoring on returned earnings, particularly on the reporting of income-increasing accruals. It is observed that the strategic shareholdings of senior management have more impact on earnings than short-term incentives. This demonstrates that long-term managerial ownership is a more effective way of aligning the interests of mangers with those of shareholders than short-term compensation such as bonus plan.

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Section: Independence Of the Board Of Directorsmentioning

confidence: 94%

Board Monitoring, Management Contracting and Earnings Management: An Evidence from ASX Listed Companies

Liu¹

2012

IJEF

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“…Tax aggressiveness, which serves as a way to increase after-tax firm value, can help the board members enjoy the benefits of increased share values. Moreover, McWilliams and Sen (1997) show that when directors increase their ownership of the firm, the potential managerial entrenchment incentives increase. With more shareholdings, the directors have greater incentives to work to increase the value of the company.…”

Section: Board Shareholdingsmentioning

confidence: 98%

“…On the other hand, agency theory suggests that more effective control over managers to align their interests to the shareholders will be better achieved by the separation of the CEO from the chairman. The co-services performed by the board chairman may impair effective monitoring and also hinder honest evaluation of firm performance by the board which in turn leads to long-term adverse consequences (Dalton and Kesner, 1997;McWilliams and Sen, 1997).…”

Section: Ceo As Chairman Of the Boardmentioning

confidence: 99%

Government ownership, corporate governance and tax aggressiveness: evidence from China

Chan¹,

Zhou³

2013

Account Finance

113

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This study investigates how government ownership and corporate governance influence a firm's tax aggressiveness. Using Chinese listed companies during 2003-2009, we find that compared with government-controlled firms, nongovernment-controlled firms pursue a more aggressive tax strategy. In particular, non-government-controlled firms with a higher percentage of the board shareholdings and with a CEO who also serves as the board chairman are more aggressive. For government-controlled firms, we find that board shareholding has an impact on tax aggressiveness and it does not differ between local and central government-controlled firms. However, local government-controlled firms in less developed regions where the implementation of corporate governance measures is generally less effective are more tax aggressive than those in other regions.

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“…For example, Davidson, Jiraporn, Kim, and Nemec (2004) find that income-increasing earnings management is greater under newlyappointed dual leaders than when the newly appointed leader is only a CEO. Mallette and Fowler (1992) find the adoption of poison pills (which can reduce the likelihood of a merger) is more likely under dual leadership, and McWilliams and Sen (1997) show greater negative abnormal returns occur following anti-takeover amendments when there is dual leadership. Furthermore, dual leadership seems to entrench CEOs by reducing the likelihood of their being fired (Cannella & Lubatkin, 1993).…”

Section: Agency Perspective On Dualitymentioning

confidence: 99%

“…Some results show the potential for agency costs in duality situations (e.g. Davidson, Jiraporn, Kim & Nemec, 2004;Mallette & Fowler, 1992;McWilliams & Sen, 1997;Cannella & Lubatkin, 1993).…”

Section: A Synthesis Of Conflicting Perspectivesmentioning

confidence: 99%