Konstantinos Z. Vasileiou

Board Characteristics' Impact on Accounting Conservatism Before and During the Financial Crisis

This article investigates the extent that board characteristics and board strengths influence the accounting conservatism, estimated by market-based and accrual-based measures, before and duringthefinancialcrisis.Thepercentageofinsidedirectorsandtheadditionaldirectorships(board characteristics)werenegativelyrelatedtomarket-basedconservatism.Thisrelationshipisweakerfor theperiodduringthefinancialcrisiscomparedtotheperiodbeforethecrisis.Thenegativerelationship foundbetweenCEOandchairmanduality andaccrual-basedconservatism isweakerduring the financialcrisisthanbeforethecrisis,whichimpliesthatthefinancialcrisiscanbeconsideredasan importantelementthatleadstofailuresandweaknessesincorporategovernancemechanisms.The resultsholdaftercontrollingforinsidedirectors’ownership,leverage,firmsize,salesgrowth,sales opportunities,profitabilityandlitigationrisk,aswellasforunobservablefirmcharacteristicsthat arestableovertimebyusingfixedeffectsregressions. KeywoRDS Accounting Conservatism, Board Characteristics, Corporate Governance Mechanisms, Financial Crisis