Earnings informativeness and institutional investors on boards

  1. Carolina Bona-Sánchez 1
  2. Emma García-Meca 2
  3. Jerónimo Pérez-Alemán 1
  1. 1 Universidad de Las Palmas de Gran Canaria, Spain
  2. 2 Universidad Politécnica de Cartagena, Spain
Revue:
Revista de contabilidad = Spanish accounting review: [RC-SAR]

ISSN: 1138-4891

Année de publication: 2018

Volumen: 21

Número: 1

Pages: 73-81

Type: Article

DOI: 10.1016/J.RCSAR.2017.09.001 DIALNET GOOGLE SCHOLAR lock_openDialnet editor

D'autres publications dans: Revista de contabilidad = Spanish accounting review: [RC-SAR]

Résumé

We study the role of directors appointed by banks and those appointed by investment funds in theinformativeness of accounting earnings in a low investor protection environment with a high presence ofinstitutional directors. Results suggest that the monitoring role of directors appointed by banks and fundsimproves investor protection and increases market confidence in accounting information. The paperhas interesting academic and policy implications for the debate on the proper degree of institutionalinvolvement in corporate governance, noting that when analyzing the role of institutional investors,researchers must take into account investors’ participation in other mechanisms of corporate controlsuch as the board of directors. We contribute to the literature by showing that, in a weak regulatory andlow investor protection environment, one of the ways in which institutional investors play a monitoringrole is through influencing earnings quality when they are both shareholders and board members.

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