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Can directors' self-interests influence accounting choices?

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  • Hunton, James E.
  • Rose, Jacob M.

Abstract

Eighty-eight audit committee members participated in an experiment designed to investigate the effects of audit issue (adjustment versus restatement) and director status (single directorship versus multiple directorships) on the likelihood of accepting an auditor's recommendation. Results indicate that all participants are less likely to accept an auditor's restatement recommendation than adjustment recommendation. Further, directors holding multiple directorships are less likely to accept an auditor's restatement recommendation than directors with a single directorship. Analysis of post-experiment clinical debriefing items indicates that directors with multiple directorships are less willing to support restatements due to the potential adverse effects of restatements on their reputation capital.

Suggested Citation

  • Hunton, James E. & Rose, Jacob M., 2008. "Can directors' self-interests influence accounting choices?," Accounting, Organizations and Society, Elsevier, vol. 33(7-8), pages 783-800.
    • Handle: RePEc:eee:aosoci:v:33:y:2008:i:7-8:p:783-800
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    2. Liu, Yanju & Lu, Hai & Veenstra, Kevin, 2014. "Is sin always a sin? The interaction effect of social norms and financial incentives on market participants’ behavior," Accounting, Organizations and Society, Elsevier, vol. 39(4), pages 289-307.
    3. Mahfuja Malik, 2014. "Audit committee composition and effectiveness: a review of post-SOX literature," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 25(2), pages 81-117, October.
    4. Alqahtani, Jubran & Duong, Lien & Taylor, Grantley & Eulaiwi, Baban, 2022. "Outside directors, firm life cycle, corporate financial decisions and firm performance," Emerging Markets Review, Elsevier, vol. 50(C).
    5. Marie Caussimont & David Carassus, 2015. "L’audit financier en contexte territorial : vers un audit de performance de la gestion locale ?," Post-Print hal-02141946, HAL.
    6. Jonathan A. Christy & Zoltan P. Matolcsy & Anna Wright & Anne Wyatt, 2013. "Do Board Characteristics Influence the Shareholders' Assessment of Risk for Small and Large Firms?," Abacus, Accounting Foundation, University of Sydney, vol. 49(2), pages 161-196, June.
    7. Anna M. Rose & Jacob M. Rose & Carolyn S. Norman, 2013. "Is the objectivity of internal audit compromised when the internal audit function is a management training ground?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(4), pages 1001-1019, December.
    8. M. Farwis & M. C. A. Nazar & A. A. Azeez, 2020. "Corporate Board and Firm Risk: An Emerging Market Perspective," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(6), pages 301-317, December.
    9. Eulaiwi, Baban & Al-Hadi, Ahmed & Taylor, Grantley & Al-Yahyaee, Khamis Hamed & Evans, John, 2016. "Multiple directorships, family ownership and the board nomination committee: International evidence from the GCC," Emerging Markets Review, Elsevier, vol. 28(C), pages 61-88.
    10. Meckfessel, Michele & Moehrle, Stephen, 2017. "Self-regulation of the academic accounting literature: The case of James Hunton," Research in Accounting Regulation, Elsevier, vol. 29(1), pages 10-18.

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