One of management’s many important roles is to provide information to market participants. However, this information may be self-serving rather than beneficial to the market, especially in the case of voluntary disclosure. To curb this possibility, boards of directors are responsible for monitoring management to provide confidence in the credibility of these disclosures. To date, however, there has been no clear evidence of a link between director monitoring and the credibility of voluntary disclosure.
Recent studies do suggest directors can influence aspects of firm disclosures. In particular, Karamanou and Vafeas (2005) and Ke, Li, and Zhang (2020) document that director … Read more