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Director Networks, Political Connections, and Earnings Quality in Malaysia

Published online by Cambridge University Press:  12 August 2020

Effiezal Aswadi Abdul Wahab Open the ORCID record for Effiezal Aswadi Abdul Wahab [Opens in a new window] ,
Mohd Faizal Jamaludin Open the ORCID record for Mohd Faizal Jamaludin [Opens in a new window] ,
Dian Agustia  and
Iman Harymawan
Effiezal Aswadi Abdul Wahab*
Affiliation:
Curtin University of Technology, Australia
Mohd Faizal Jamaludin
Affiliation:
Politeknik Tuanku Sultanah Bahiyah, Malaysia
Dian Agustia
Affiliation:
Universitas Airlangga, Indonesia
Iman Harymawan
Affiliation:
Universitas Airlangga, Indonesia
*
Corresponding author: Effiezal Aswadi Abdul Wahab ([email protected])
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Abstract

This article investigates the relationship between director networks and earnings quality in Malaysia. Using data on 4,416 individual directors who served on the boards of 745 firms listed on Bursa, Malaysia during 2011, we map the entire network of directors and generate measures to reflect the size and quality of information within the network. We find a negative and significant relationship between the overall connectedness of a director's network and the firm's earnings quality. In addition, we find a negative and significant relationship between the political connectedness of the director's network and earnings quality. Our results are robust for different measures of earnings quality.

Keywords

director networksearnings qualityMalaysiapolitical connectionssocial network analysis
Type
Special Issue Articles
Information
Management and Organization Review , Volume 16 , Special Issue 3: Informal Networks: Dark Sides, Bright Sides, and Unexplored Dimensions , July 2020 , pp. 687 - 724
Copyright
Copyright © 2020 The International Association for Chinese Management Research

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Footnotes

ACCEPTED BY Senior Editor Maral Muratbekova-Touron, Guest Editors Fida Afiouni, Sven Horak, Alena Ledeneva, Senior Editor Yanjie Bian, and Deputy Editor Carl F. Fey

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