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Director Networks, Political Connections and Earnings Quality in Malaysia

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Open access
Authors
Abdul Wahab, Effiezal
Jamaludin, Mohd Faizal
Agustia, Dian
Harymawan, Iman
Date
2020
Type
Journal Article

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Abdul Wahab, E. and Jamaludin, M.F. and Agustia, D. and Harymawan, I. 2020. Director Networks, Political Connections and Earnings Quality in Malaysia. Management and Organization Review. 16 (3): pp. 687-724.
Source Title
Management and Organization Review
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Faculty
Faculty of Business and Law
School
School of Accounting
Remarks

This article has been published in a revised form in Management and Organization Review http://doi.org/10.1017/mor.2020.26. This version is free to view and download for private research and study only. Not for re-distribution or re-use. © 2020 The International Association for Chinese Management Research

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Abstract

© 2020 The International Association for Chinese Management Research.

This paper investigates the relationship between director networks and earnings quality in Malaysia. Using data on 4,416 individual directors who served on the boards of 745 firms listed on Bursa Malaysia during 2011, we map the entire network of directors and generate measures to reflect the size and quality of information within the network. We find a negative and significant relationship between the overall connectedness of a director’s network and the firm’s earnings quality. In addition, we find a negative and significant relationship between the political connectedness of the director’s network and earnings quality. Our results are robust for different measures of earnings quality.