CHARTERED ACCOUNTANT AND PUBLIC ACCOUNTING EXPERIENCE NON-EXECUTIVE DIRECTORS ON UK BOARDS: SIGNALS OF QUALITY EARNINGS REPORTING TO INVESTORS PROMPTING PRICE-TO-EARNINGS GROWTH

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Kevin A. Diehl

DOI:10.22495/cocv9i2c5art8

Abstract

This research seeks to determine for the first time whether the presence of non-executive directors with chartered accountant and public accounting financial expertise on UK boards is important to investors in terms of signaling higher reporting quality. If so, investors should be willing to give higher premiums on stock prices over earnings than for companies with boards without these financial expertise characteristics. In this era not so distant from Enron and Parmalat, investors should value these characteristics to be present in evaluating the external and internal audits in financial reporting. The average price-to-earnings growth for companies with these board characteristics is 145.11 percent compared to an average decrease of 99.85 percent for those companies that do not.

Keywords: Accounting, Earnings, Board of Directors, Non-executive Director, Corporate Governance

How to cite this paper: Diehl K. A. (2012). Chartered accountant and public accounting experience non-executive directors on UK boards: Signals of quality earnings reporting to investors prompting price-to-earnings growth. Corporate Ownership & Control, 9(2-5), 530-536. http://dx.doi.org/10.22495/cocv9i2c5art8