This paper empirically examines whether certain corporate governance mechanisms are related to the probability of a company restating its earnings. We examine a sample of 159 U.S. public companies that restated earnings and an industrysize matched sample of control firms. We have assembled a novel, hand-collected dataset measuring corporate governance characteristics of these 318 firms. We find that several key governance c haracteristics are unrelated to the probability of a company restating earnings. These include the independence of boards and audit committees, and the provision of non-audit services by outside auditors. We find that the probability of restatement is lower in companies whose boards or audit committees have an independent director with a background in accounting or finance. This relation is statistically significant, large in magnitude, and robust to alternative specifications. Our findings are consistent w ith the idea that independent directors with financial expertise are valuable in providing oversight of a firm's financial reporting practices.JEL classification: G34, G38, K22, L51, M41

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