IMPACT OF BOARD CHARACTERISTICS ON ACCOUNTING CONSERVATISM IN EMERGING SOUTH ASIAN ECONOMIES

Abstract

Corporate governance is the backbone that determines the effectiveness, transparency, and sustainability of any organization in today's fast-moving business world. In this regard, the study has attempted to investigate how accounting conservatism is affected by corporate governance systems in the developing South Asian countries i-e Pakistan, India, and Bangladesh. Accounting conservatism is the dependent variable of the study. The corporate governance methods used in this study have covered Board size, Board independence, Board activity, CEO turnover, and Gender diversity. Secondary data that has been used in the study and were extracted from various online sources and the annual reports of the listed companies. This research sampled the non-financial companies of the Pakistan Stock Exchange (PSX), Bombay Stock Exchange (BSE), and Dhaka Stock Exchange (DSE). The information was collected from 100 firms between 2014 and 2023, in order of high market capitalization. The results of the study indicate  that there exist notable differences among the selected South Asian firms. The conclusions of the study suggest that, in the case of Pakistan, Board size and Board activity have a positive effect on AC, while Board independence, CEO turnover, and Gender diversity are found to be insignificant. In the Indian case, CEO turnover and Gender diversity have negligible effects, while board size, independence, and activity have considerable effects. Third While the combined effect of CEO turnover and board independence is trivially small, gender diversity contributes notably. The findings of this study support the validity of both Positive Accounting and Agency theory in the emerging markets of South Asia. Regarding South Asia, the main research focus, it has implication on the regulators, policymakers, analysts, researchers, as well as other readers of the financial statements.