Accounting and Finance Department Research Seminar
When: Friday,
October 20, 2023
10:00 AM
-
11:15 AM
Where: > See description for location
Description: The Accounting and Finance Department announces the following research seminar.
Speaker: Professor. Nan Zhou (University of Cincinnati)
Title: Mandatory Rotation of Audit Committee Chairs and Its Impact on Financial Reporting Quality: Evidence from Director Term Limits in China
Date: Friday, October 20, 2023
Time: 10:00-11:15 AM
Location: via Zoom Meeting
https://umassd.zoom.us/j/4387551509?pwd=bVB2QzdtRmFCdkk1WTVQSUxHMS9iQT09
Meeting ID: 438 755 1509
Abstract: We examine whether an audit committee (AC) chair delivers the same level of monitoring during different phases of her/his tenure. We take advantage of a unique Chinese setting where independent directors by law are allowed to serve a maximum of two consecutive three-year terms. We build our hypothesis based on a cost and benefit analysis of AC chair effective monitoring. We hypothesize that the reduced monitoring cost stemming from diminished discomfort from director-management confrontation, in conjunction with increased career concern incentives, leads to a higher level of monitoring effectiveness in the AC chair's departure year. Consistent with this conjecture, we find that a firm has higher financial reporting quality in the mandatory departure year of its AC chair. Our findings and inferences are robust to alternative design choices. We also perform a test to examine the labor market outcome of an AC chair's effective monitoring. We show that an AC chair's monitoring is indeed "priced" in the directorship labor market. By focusing on enhanced independence and increased career concern occurring in the mandatory final year of an AC chair's appointment, our evidence contributes to the understanding of independence as a multifaceted and nuanced concept.
For additional information, please contact Prof. Hongkang Xu at hxu5@umassd.edu.
Speaker: Professor. Nan Zhou (University of Cincinnati)
Title: Mandatory Rotation of Audit Committee Chairs and Its Impact on Financial Reporting Quality: Evidence from Director Term Limits in China
Date: Friday, October 20, 2023
Time: 10:00-11:15 AM
Location: via Zoom Meeting
https://umassd.zoom.us/j/4387551509?pwd=bVB2QzdtRmFCdkk1WTVQSUxHMS9iQT09
Meeting ID: 438 755 1509
Abstract: We examine whether an audit committee (AC) chair delivers the same level of monitoring during different phases of her/his tenure. We take advantage of a unique Chinese setting where independent directors by law are allowed to serve a maximum of two consecutive three-year terms. We build our hypothesis based on a cost and benefit analysis of AC chair effective monitoring. We hypothesize that the reduced monitoring cost stemming from diminished discomfort from director-management confrontation, in conjunction with increased career concern incentives, leads to a higher level of monitoring effectiveness in the AC chair's departure year. Consistent with this conjecture, we find that a firm has higher financial reporting quality in the mandatory departure year of its AC chair. Our findings and inferences are robust to alternative design choices. We also perform a test to examine the labor market outcome of an AC chair's effective monitoring. We show that an AC chair's monitoring is indeed "priced" in the directorship labor market. By focusing on enhanced independence and increased career concern occurring in the mandatory final year of an AC chair's appointment, our evidence contributes to the understanding of independence as a multifaceted and nuanced concept.
For additional information, please contact Prof. Hongkang Xu at hxu5@umassd.edu.
Contact: > See Description for contact information
Topical Areas: Faculty, General Public, Students, Accounting and Finance