Author
Listed:
- Jun Zhou
- Lingling Hao
- Ming Yang
Abstract
In the vast territory of China, travel convenience may be an important external influence on independent directors in their governance role. In this paper, the relationship between travel convenience and earnings quality is examined from the perspective of a non-local independent director with accounting expertise. We define travel convenience as existing where the high-speed railway takes less than one hour to travel from the location of the company’s office to the independent director’s home location. The study finds that travel convenience is positively associated with earnings quality of a company whose independent directors with accounting expertise are non-local. Earnings quality of companies whose independent directors with accounting expertise are local is higher than that of companies whose independent directors with accounting expertise are non-local and for whom travel is inconvenient. There is no significant difference in earnings quality between companies whose independent directors with accounting expertise are local and those whose independent directors with accounting expertise are non-local but for whom travel is convenient. Further study shows that this conclusion is still valid if we define travel convenience as existing when the geographical distance between the company and the non-local independent directors’ home location is less than 200 km or 100 km. This indicates that travel convenience enhances the governance effect of non-local independent directors and improves the company’s earnings quality.
Suggested Citation
Jun Zhou & Lingling Hao & Ming Yang, 2018.
"Earnings quality and travel convenience in China for non-local independent directors with accounting expertise,"
China Journal of Accounting Studies, Taylor & Francis Journals, vol. 6(3), pages 295-320, July.
Handle:
RePEc:taf:rcjaxx:v:6:y:2018:i:3:p:295-320
DOI: 10.1080/21697213.2018.1567108
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