The Influence of Internal Governance Mechanisms on Accounting Conservatism

This study empirically examines the association between the attributes of the board of directors and audit committee on accounting conservatism. Results from panel data analysis for 300 Malaysian listed firms observed from 2001 to 2007 show that boards with at least four annually audit committee meetings and higher proportion of independent directors and financial expertise, are faster in recognising bad news into earnings relative to the good news. In addition, it is proven that both independent directors and financial expertise in audit committee nor the board size and CEO duality are associated with conservatism.