The Association between Social Ties Within Boards and Human Resource Investment in Internal Control
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According to prior literature and media articles, outside directors that have social ties with inside directors do not monitor managers appropriately. This study examines the association between social ties within boards and human resource investment in internal control (IC) over financial reporting. Using Korean firm data, we found that social ties within boards are negatively associated with the IC of firms’ accounting and public disclosure departments, which could negatively affect the reliability of their financial reporting and disclosures. These findings have valuable implications for interested parties such as investors and regulators.
Abstract
According to prior literature and media articles, outside directors that have social ties with inside directors do not monitor managers appropriately. This study examines the association between social ties within boards and human resource investment in internal control (IC) over financial reporting. Using Korean firm data, we found that social ties within boards are negatively associated with the IC of firms’ accounting and public disclosure departments, which could negatively affect the reliability of their financial reporting and disclosures. These findings have valuable implications for interested parties such as investors and regulators.
참고문헌 (25)
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