Internal governance mechanisms and value relevance of accounting earnings: an empirical study in the French context

Abstract

The objective of this study is to analyse the impact of internal governance mechanisms related to the board of directors, the audit committee and the ownership structure on the value relevance of accounting earnings in the French context. Using the method of Panel Corrected Standard Errors in the context of panel data, we find that the CEO duality and the existence of an audit committee have a negative effect on the value relevance of accounting earnings while the ownership concentration and the institutional ownership contribute to increase the value relevance of earnings. Furthermore, the empirical results show that leverage and growth have a positive effect on the value relevance.

Audit Committee and Accounting Information Value Relevance

“…Moreover, Ayadi & Boujelbène (2015) and Ibanichuka & Briggs (2018) find that AC independence does not affect value relevance of accounting numbers, as well as Chan, Lau, & Ng (2011) and Saseela (2018) who reports that AC independence does not affect firm's value. On the contrary, Fakhari & Pitenoei (2017) report that AC independence positively affects the information environment, whereas Rizki & Mita (2017) find that audit committee independence strengthens a firm's asset value relevance.…”

Does Ownership Structure Improve Financial Reporting Quality? Evidence of Real Earnings Manipulation among Pakistani Firms

“…Pongsaporamat (2016) empirically investigated the association between institutional shareholders and income manipulation of the Thai firms and concluded that large institutional ownership fails to curb the management behavior of manipulation of income and thus reducing the quality of financial reports. Ayadi and Boujelbene (2015) study the impact of institutional ownership on earnings quality of 117 French companies and documented that institutional shareholders have no power to control the income manipulation and reporting quality. According to the mixed results, this study conclude the following hypothesis.…”

How does leverage affect the value relevance? Evidence from Turkey

“…Second, many studies (e.g. Ayadi & Boujelbène, 2015;Habib & Azim, 2008;Habib & Weil, 2008) directly employ leverage as an interaction term to measure the effect of leverage on the VR of accounting information and contribute to mixed evidence in the literature.…”

“…The latter literature directly employs leverage as an interaction term (e.g. Ayadi & Boujelbène, 2015;Habib & Azim, 2008;Habib & Weil, 2008), and it does measure the effect of leverage -instead of the high level of leverage -on the VR of accounting information. Furthermore, this literature includes several studies employing leverage dummies, which are obtained based on the median leverage level, as interaction terms (e.g.…”