NEXUS BETWEEN ACCOUNTING CONSERVATISM AND BOARD ATTRIBUTES: MODERATING ROLE OF INSTITUTIONAL OWNERSHIP

Abstract

Accounting conservatism is a principle for preparing financial statements to maintain
accuracy and provide an accurate picture of the company's performance. This study
examines the impact of board attributes on accounting conservatism with a moderating role
of institutional ownership. Accounting conservatism is treated as a dependent variable, while
board attributes (Board independence, Board size, Board diversity) are treated as
independent variables in the current study. The current study uses the random effect model
for the panel data from 2012-2021 to obtain the main objectives. The study's findings show
that board size and independence are statistically significant and positively related to
accounting conservatism. In contrast, board diversity is an insignificant factor in accounting
conservatism. Moreover, the study also finds that institutional ownership has an influential
role in tackling the issue of accounting conservatism. Institutional ownership with board size
and independence has a significant positive association with accounting conservatism in nonfinancial firms. This study breaks new ground by exploring the scarcity of literature on
board-specific attributes and institutional investors' role in addressing accounting
conservatism, especially in poorly developed economies. This study significantly adds to the
current literature by offering comprehensive insights and empowering investors with valuable information.