The effect of governance characteristics on information content of discretionary accruals: A comparative study between France and the USA

Abstract

The aim of this paper is to examine the relationship between strong governance structure and the information content of discretionary accruals in countries, which present differences in their legal system (USA and France). To approach the concept of corporate governance which recovers several dimensions: the board of directors, its committees, and ownership structure we used the method of Data Envelopment Analysis (DEA). The findings indicate that the association between stock return and discretionary accruals is greater for firms having a good corporate governance structure independently of the context of study. Further, discretionary accruals of firms having good corporate governance have a greater association with future profitability future only for American context.