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Can Independent Directors Improve the Quality of Earnings? Evidence from Taiwan

Author(s): Yung-Chuan Lee

Journal: Advances in Management and Applied Economics
ISSN 1792-7544

Volume: 3;
Issue: 3;
Start page: 45;
Date: 2013;
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This study investigated companies publicly listed in Taiwan from 2002 to 2010 to examine whether independent directors improve the quality of earnings and analyzed whether the control rights of a controlling shareholder mitigate the impact of independent directors on earnings quality. Empirical results showed that independent directors can improve the quality of earnings, and those hired because of mandatory appointments had a greater positive effect on earnings quality compared to directors who were voluntarily hired. In addition, we also found that the controlling share held by a controlling shareholder reduces the benefit of independent directors on earnings quality.
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