Inside directors’ characteristics and accruals management: The roles of controlling shareholders’ control-cash flow rights deviation, accounting background, and family member

Authors: Yi-Hui Tai; Ying-Chieh Wang

Journal: Corporate Management Review. Jun. 2022, 42(1): 71-115

Keywords: Inside director, accruals management, controlling shareholders’ control-cash flow rights deviation, accounting background, family member.

Abstract:
This research takes data of 7,106 Taiwanese-listed companies to investigate the association between the characteristics of inside directors and accruals management under the environment with higher controlling shareholders’ control-cash flow rights deviation. When the proportion of inside directors in a firm is greater, our findings reveal that the amount the firm engages in accruals management is larger. Under the same environment, inside directors with an accounting background can mitigate the positive relation between the proportion of inside directors in a firm and the amount the firm engages in accruals management. Regardless of a higher or lower percentage of inside directors served by family members, under higher controlling shareholders’ control-cash flow rights deviation, there is a positive relation between the proportion of inside directors and the amount the firm engages in accruals management.