AGE OF DIRECTORS AND QUALITY OF THE ACCOUNTING INFORMATION IN BRAZIL
Name: ÉDIPO FERREIRA DE VASCONCELOS
Publication date: 21/12/2020
Advisor:
Name |
Role |
|---|---|
| JOSE ELIAS FERES DE ALMEIDA | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| DIANE ROSSI MAXIMIANO REINA | Internal Examiner * |
| JOSE ELIAS FERES DE ALMEIDA | Advisor * |
Summary: The main functions of the board of directors are the monitoring and the strategic direction of company executives. The attributes of the board can directly affect the quality of the financial statements. This study investigates the effect of the age of the board members on earnings quality in Brazil, by using earnings management and conservatism models. Our sample use financial information collected from the Comdinheiro's database and consists of 405 non-financial public companies listed on B3 Brasil, Bolsa e Balcão, totaling 1,557 observations from 2011 to 2018. We use the earnings management models developed by Dechow, Sloan and Sweeney (1995)
and Dechow, Hutton, Kim and Sloan (2012) to estimate the discretionary accruals, while the conditional conservatism is captured using the Basu (1997) and Ball and Shivakumar (2005) models. The results show that the average age of the members has a positive influence on earnings management, however, younger or older boards, first and last quartiles, respectively, mitigate earnings management via accruals. Evidence was also found between the average age of boards of directors and conservatism in the disclosure of accounting information, with boards made up of older members tending to be more conservative. This study contributes to the literature by presenting that age is an attribute of the board of directors that, if well dimensioned in
companies, can help in improving the quality of financial reporting.
