Busy CEOs and financial reporting quality: evidence from Indonesia
Purpose This study aims to examine the relationship between CEO busyness and financial reporting quality in a country which implements a two-tier board system. Design/methodology/approach This study includes firms listed on the Indonesian Stock Exchange during the 2010–2018 period. This study e...
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| Main Authors: | , , , , |
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| Format: | Article PeerReviewed |
| Language: | English English Indonesian |
| Published: |
Emerald Publishing Limited
2022
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| Subjects: | |
| Online Access: | https://repository.unair.ac.id/127407/1/MohNasih_Karil119_Busy-CEOs-and-financial.pdf https://repository.unair.ac.id/127407/2/MohNasih_Similarity119_Busy-CEOs-and-financial.pdf https://repository.unair.ac.id/127407/3/MohNasih_KualitasKaril119.pdf https://repository.unair.ac.id/127407/ https://www.emerald.com/insight/content/doi/10.1108/ARA-11-2021-0203/full/html https://doi.org/10.1108/ARA-11-2021-0203 |
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| Institution: | Universitas Airlangga |
| Language: | English English Indonesian |
| Summary: | Purpose
This study aims to examine the relationship between CEO busyness and financial reporting quality in a country which implements a two-tier board system.
Design/methodology/approach
This study includes firms listed on the Indonesian Stock Exchange during the 2010–2018 period. This study employs an ordinary least squares regression, the propensity score matching procedure, and a Heckman two-stage regression in testing the hypothesis.
Findings
This study finds that firms with busy directors have a higher financial reporting quality, and these results are robust to a battery or sensitivity analysis. The additional analyses also find that a busy CEO is negatively associated with the firm's financial reporting quality with decreasing income.
Practical implications
This paper provides implications for policy-makers in the emerging market on devising policies on CEOs' appointments, especially when involving multiple directorships. Despite the general belief on the detrimental workload effects of busy directors, this study offers evidence supporting the opposite effect.
Originality/value
As many previous studies focused on the effect of director busyness on firm’s performance, this study focusses on the effect of CEO busyness on financial reporting quality. To the best of our knowledge, this study is the first to investigate this issue in an emerging market. |
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