Military-experienced directors, CEO busyness and financial statement footnotes readability: evidence from Indonesia
Purpose: This study examines the relationship between the characteristics of militarily experienced directors and financial statement footnote readability. The second research question considers whether CEO busyness impacts the relationship between military-experienced directors and financial statem...
| Main Authors: | , , , |
|---|---|
| Format: | Journal Article |
| Published: |
2024
|
| Online Access: | http://hdl.handle.net/20.500.11937/95401 |
| Summary: | Purpose: This study examines the relationship between the characteristics of militarily experienced directors and financial statement footnote readability. The second research question considers whether CEO busyness impacts the relationship between military-experienced directors and financial statement footnotes readability. Design/methodology/approach: We use nonfinancial listed firms on the Indonesian Stock Exchange from 2010 to 2018, which amounted to 1,002 firm-year observations. We test the hypotheses and use fixed effects and Heckman's two-stage regression. Findings: This study documents a negative relationship between military directors and financial statement footnote readability. We extend this relationship by factoring board busyness into the equation. We find that the presence of military-connected and busy CEOs negatively impacts the readability of financial statement footnotes. The results remain robust after additional analyses. Research limitations/implications: Future research should consider a more robust measure of military-experienced directors. A broader context of directors' busyness should be considered, such as including multiple directorships. Originality/value: We revisit the literature on military-experienced directors by considering political connections as one of the proxies for military connections in Indonesia. The findings largely support the convergence of the political connections literature in which rent-seeking activities are prevalent and prevent sound financial reporting. |
|---|