Corporate governance in relationship to value relevance and accounting conservatism: SBF 120 firms

Abstract

This study examines the relationship between disclosure quality as measured by value relevance and accounting conservatism and the corporate governance mechanisms such as the characteristics of the financial market, board of directors and ownership structure of French companies listed on the SBF 120. The result shows that the companies can have a high-value relevance of accounting information or practice accounting conservatism when they are featured by the existence of a high number of financial analysts who follow the company, are listed on a US stock exchange or have a dispersed structure capital. The findings show also that the significant institutional shareholders, foreign ownership, a board with small size, separation of functions as well as the creation of a supervisory board, as well as high performance and a low level of leverage contribute to improving the quality of accounting value. We can argue that the results may be of practical interest to potential investors in the SBF 120 firms. This study recommends the usefulness that companies invest in the financial disclosure policy to increase the credibility perceived by the users. of the annual report as to the quality of the information disclosed. In addition, we can argue that the outcomes that emanate from this research work are of interest to the information users who are concerned with the search for quality financial information. Indeed, our results reveal that SBF 120 companies have a divergence in the quality of their financial disclosures, which is why the managers of these companies must invest in the publication of financial information in accordance with the expectations of the different stakeholders.