英文摘要 |
This study examines the impacts of board political connection and client importance on fraudulent financial reporting. The empirical results reveal that firms with board political connection have lower occurrence rate of fraudulent financial reporting. However, client importance is significantly positively associated with the incidence of fraudulent reporting because the effect of economic dependence is stronger than the concerns of reputation protection for the auditors. Firms that were audited by Big-4 and paid higher fees have lower occurrence rate of fraudulent financial reporting. As to the corporate governance variables, firms with higher core agency costs have higher likelihood of fraudulent financial reporting. Firms with higher percentage of independent directors on the board, institutional investor ownership, and director and supervisor ownership have lower likelihood of fraudulent financial reporting. The empirical results support that having politically connected board of directors in the firm can improve corporate governance as well as having audit firms that strengthen their independence through quality control. With improved corporate governance quality, firms therefore can mitigate the incidence of fraudulent financial reporting. |