Board Composition and Corporate Fraud in Japan: The Role of Internal and External Directors

DOI

説明

<p>The increasing incidence of corporate fraud worldwide has renewed interest in studying the relationship between governance structures and fraud occurrence. Previous studies have predominantly examined the effect of external directors on preventing fraud. However, the efficacy of internal directors in preventing fraud is crucial to understanding corporate fraud in the context of Japan. This is because (a) Japanese corporate boards are dominated by insiders, and (b) external directors may be ‘grey’ and are not fully independent. This study examines board composition and corporate fraud in Japan focusing on the attributes of internal directors to test whether board homogeneity affects fraud occurrence. We construct panel data consisting of about 9,000 firms listed on the Tokyo Stock Exchange between 2015 and 2020. Panel regression results show that longer tenure of internal directors is associated with higher fraud. More importantly, we find that higher share of lifetime directors is associated with higher fraud risk, and that neither external nor internal directors from parent firms are effective in preventing fraud in the Japanese context. Results advance our understanding of the intricate and context-specific relationship between board composition and corporate fraud, and makes a strong empirical addition to the behavioural agency theory and homophily theory.</p>

収録刊行物

  • 組織科学

    組織科学 advpub (0), 2024

    特定非営利活動法人 組織学会

キーワード

詳細情報 詳細情報について

  • CRID
    1390300379550634624
  • DOI
    10.11207/soshikikagaku.20240601-3
  • ISSN
    2187932X
    02869713
  • 本文言語コード
    en
  • データソース種別
    • JaLC
  • 抄録ライセンスフラグ
    使用不可

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