CORPORATE GOVERNANCE AND ACCOUNTING CONSERVATISM

Abstract

This study aimed to investigate the relationship between corporate governance and accounting conservatism within the context of FTSE 100 in the UK. In order to tackle this aim, this study explored the effect of board independence, CEO tenure, CEO duality, company size, and board size of the FTSE 100 on their accounting conservatism. Data were collected across five time periods ending 2018 and collected from annual reports of the companies and from Thompson Reuters and Data Stream. After running regression equation and using panel data (fixed, random, Hausmann Test, and multicollinearity diagnostic test), the findings indicate that independent directors, board size, and company size positively affect accounting conservatism. However, there were inconclusive results in regard to the role of CEO tenure and CEO duality on accounting conservatism. In regard to the limitations on this study, it can be said that this study was conducted within parameters in terms of time and cost and these limitations hamper the researcher from including other control variables such as leverage, performance and growth. Furthermore, this study did not consider other variables of the corporate governance codes such as frequency of meeting in regard to the board of directors and the characteristics of the committees within these companies.