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| Abstract : Universiti Pendidikan Sultan Idris |
| Non-executive directors are appointed based on various distinct attributes which are expected to enhance the quality of decision-making and improve the performance of firms. Financial information serves as an important communication tool to various stakeholders’ groups. In extant studies, manipulation of financial information has been associated with managerial opportunistic behavior, hence, the need for non-executive directors. This study explores various attributes of non-executive directors and how these influence earnings quality. The study sourced secondary data from annual reports of listed firms on the Nigerian Exchange Group, which were analysed using the feasible generalized least square method. Directors’ attributes were proxied with expertise, tenure, nationality, shareholdings, and multiple directorship while the modified jones model was employed for earnings quality. The findings revealed that among the attributes of non-executive directors studied shareholdings and nationality significantly affect earnings quality. The study contributes to the literature on the effectiveness and role of non-executive directors. The study result depicts that foreign non-directors are more effective in monitoring the affairs of firms, as well as directors with shareholdings in the firm. This implies that in the appointment of non-executive directors, diversity should be encouraged with provision for stock options. |
| References |
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Journal of Finance and Economics, 113(3), 383-403. Ashraf, B. N., & Qian, N. (2021). The impact of board internationalization on real earnings management: Evidence from China, 1-18. DOI: 10.1177/21582440211032640 Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467-498. Belot, F., & Serve, S. (2015). Do women engage in less earnings management than men?: The case of privately held French SMEs. Central Bank of Nigeria [CBN] (2014). Code of corporate governance for banks and discount houses in Nigeria and guidelines for whistle blowing in the Nigerian Banking Industry. Chalaki, P., Didar, H. & Rianezhad, M. (2012). Corporate governance attributes and financial reporting quality: Empirical evidence from Iran. International Journal of Business and Social Science, 3(15), 1-7. Chee, K. D., & Tham, Y. H. (2020). 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Abu-Risheh, K. E., & Al-Sa’eed, M. A. (2012). The impact of good corporate governance practices on financial reporting quality: Empirical evidence from Jordanian listed companies. Corporate Ownership & Control, 9(4), 178-186. Akewusola, R. O., & Saka, R. O. (2018). Executive compensation and organizational financial performances: Evidence from selected diversified firms in Nigeria. IOSR Journal of Business and Management, 20, 8-17. Al-Rassas, A. H., & Kamardin, H. (2015). Directors’ independence, internal audit function, ownership concentration and earnings quality in Malaysia. Asian Social Science, 11 (15), 244-256. doi:10.5539/ass.v11n15p244 Al-Sraheen., A. A., & Al-Daoud., K. A. (2018). Does the presence of independent directors reduce the practices of earnings management? The moderating role of family ownership concentration. Ekonomski Pregled, 69(6,) 638-654. Armstrong, C. S., Core, J. E., & Guay, W. R. (2014). Do independent directors cause improvements in firm transparency? Journal of Finance and Economics, 113(3), 383-403. Ashraf, B. N., & Qian, N. (2021). The impact of board internationalization on real earnings management: Evidence from China, 1-18. DOI: 10.1177/21582440211032640 Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467-498. Belot, F., & Serve, S. (2015). Do women engage in less earnings management than men?: The case of privately held French SMEs. Central Bank of Nigeria [CBN] (2014). Code of corporate governance for banks and discount houses in Nigeria and guidelines for whistle blowing in the Nigerian Banking Industry. Chalaki, P., Didar, H. & Rianezhad, M. (2012). Corporate governance attributes and financial reporting quality: Empirical evidence from Iran. International Journal of Business and Social Science, 3(15), 1-7. Chee, K. D., & Tham, Y. H. (2020). 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