TY - JOUR
T1 - The initiation of audit committee interlocks and the contagion of accounting policy choices
T2 - evidence from special items
AU - Dharwadkar, Ravi
AU - Harris, David
AU - Shi, Linna
AU - Zhou, Nan
N1 - Funding Information:
We thank Scott Richardson (editor) and an anonymous referee for their valuable suggestions, which have significantly improved our paper. We also thank Pamela Brandes, Joseph Comprix, Parthiban David, Gerry Davis, Hui Guo, Sangsoo Kim, Mark Mizruchi, Paul Ordyna, Chen Xue, and workshop participants at American University, SUNY?Binghamton, Syracuse University, University of Cincinnati, University of International Business and Economics, Zhejiang University, and the Conference on the Convergence of Financial and Managerial Accounting Research in Lake Louise for their helpful comments.
Publisher Copyright:
© 2020, Springer Science+Business Media, LLC, part of Springer Nature.
PY - 2020/3/1
Y1 - 2020/3/1
N2 - We document that the initiation of audit committee interlocks is associated with contagion in reported special items. We argue that this is, in part, attributable to contagion of accounting policy choices. We find that the special items of newly interlocked firms, unrelated before interlock, become positively correlated afterward, suggesting information transfer starts with interlock formation. This result holds for negative special items, key components of special items (asset impairments, restructuring costs, and gains/losses from asset sales), and is stronger for larger firms and for firms within the same industry.
AB - We document that the initiation of audit committee interlocks is associated with contagion in reported special items. We argue that this is, in part, attributable to contagion of accounting policy choices. We find that the special items of newly interlocked firms, unrelated before interlock, become positively correlated afterward, suggesting information transfer starts with interlock formation. This result holds for negative special items, key components of special items (asset impairments, restructuring costs, and gains/losses from asset sales), and is stronger for larger firms and for firms within the same industry.
KW - Audit committee interlock
KW - Information transfer
KW - Restructuring charges
KW - SFAS 146
KW - Special items
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U2 - 10.1007/s11142-019-09516-w
DO - 10.1007/s11142-019-09516-w
M3 - Article
AN - SCOPUS:85077568821
SN - 1380-6653
VL - 25
SP - 120
EP - 158
JO - Review of Accounting Studies
JF - Review of Accounting Studies
IS - 1
ER -