Title: Military-experienced Directors, CEO Busyness and Financial Statement Footnotes Readability: Evidence from Indonesia
Authors:
- Effezal Aswadi Abdul Wahab
- Iman Haryamawan
- Damara Ardelia Kusuma Wardani
- Mohammad Nasih
Department: Akuntansi
Journal Name: Asian Review of Accounting
Kinds of Journal: Q2
Keywords: CEO busyness, Governance, Military connection, Readability
Abstract:
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.
For details: https://www.emerald.com/insight/content/doi/10.1108/ara-09-2023-0246/full/html
