Board of Directors’ Characteristics and Financial Restatement


Suhaily Hasnan
Universiti Teknologi MARA
Hafizah Marzuki
Universiti Sains Islam Malaysia


The purpose of this study is to explore the effects of bond characteristics on financial restatement. The characteristics of board of directors are board size, board independence, directors’ tenure, gender diversity, board competence, board ethnicity, foreign board, duality role, multiple directorship, directors having political connections, board age and founder on board. The sample comprise of 76 restatement firms and 152 non-restatement firms that are listed on the Main Market of BURSA Malaysia for the period between 2006 and 2013. This study used univariate and multivariate statistical techniques to test research hypotheses. The findings show that size of board, cross directorship, political linkages and founder on board are significantly associated with the financial restatement incidents. These findings may provide some general implication for future research that some form of board characteristics can influence the direction and magnitude of financial restatement. Furthermore, this study focuses on the Agency Theory and the Resource Dependence Theory in attempt to explain the relationship between board characteristics and financial restatement.

Keywords: Financial restatement, accounting misstatement, board of directors’ characteristics, board composition, board diversity, corporate governance.


JMIFR Vol 14 No.1 Jun. 2017 - Part 1




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