Working Paper Series
Reggy Hooghiemstra, Niels Hermes, Lars Oxelheim
The Impact of Board Internationalization on Earnings Management
() and Trond Randøy
Abstract: Prior literature shows that choices regarding board
composition are associated with earnings management. We add to this
literature by examining the effects of the presence of a foreign board
member on earnings management. Using a sample of 3,249 firm-year
observations representing 586 non-financial listed Nordic firms during
2001–2008, we find that the presence of a non-Nordic, foreign director is
associated with significantly higher levels of earnings management.
Moreover, we provide preliminary evidence that differences in accounting
knowledge drive this effect. Our results suggest that it may not
necessarily be beneficial to appoint a foreign director to the board.
Keywords: Earnings management; Board composition; Internationalization; Foreign board member; Accounting knowledge; (follow links to similar papers)
JEL-Codes: G34; M16; M41; M52; (follow links to similar papers)
38 pages, December 3, 2015
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