이사회 구성원의 공학적 교육 전문성과 재무보고의 질

This study investigates the influence of educational specializations of the board of directors on financial reporting quality. Among educational specializations, we focus on educational background represented by academic majors in engineering. Previous researches show that the educational background of board of directors affect on financial reporting quality. Especially, researches argue that majoring in accounting and law has a positive relation with financial reporting quality. Also, the educational background is related with risk preference of management. In this study, we use absolute value of discretionary accruals measured by modified Jones Model, the Performance matched by modified Jones Model (Kothari et al., 2005), accrual quality measured by modified Dechow and Dichev model (Francis et al., 2005) and conservatism model measured by Goh and Li(2011) to proxy financial reporting quality. In addition, we measure engineering background of directors as ratio (proportion of the board of directors), numbers (number of directors with each major). The sample is gathered from TS2000 database collected by Korea Listed Companies Association from 2002 to 2010. We found several results. First , the proportion and the number of directors majoring in engineering are positively related with the absolute value of discretionary accruals measured by modified Jones Model and Performance matched modified Jones Model meaning lower financial reporting quality. Second, the proportion and the number of directors majoring in engineering are negatively related with the accrual quality measured by modified Dechow and Dichev model (Francis et al., 2005). Finally, financial reports including board members majoring in engineering are less conservative. We also analyzed the relationship between the engineering background of outside directors and the financial reporting quality. The results show that the majoring in engineering of outside directors has a negative relation with financial reporting quality. In conclusion, the educational background of directors majoring in engineering affects on the financial reporting quality negatively. This is the first paper investigating the engineering effects as an educational background on accounting decision making while prior researches focused on the firm level variables. Our findings also complement prior researches in the monitoring role of outside directors by providing a new evidence on the role of educational background of outside directors affecting financial reporting quality.