Earnings Informativeness, Board Size, Board Composition and Board Leadership Structure

One of the functions of board of directors is to monitor the quality of financial reporting. Therefore, It is important to understand whether board of director characteristics influence the quality of financial reporting. This paper examines whether earnings informativeness varies with board size, board composition and board leadership structure. We measure earnings informativeness by earnings and stock returns relationship. Our data consists of 3,761 firm-year observations of Malaysian firms listed on Bursa Malaysia over the period 2001-2012. Our results show that earnings informativeness is greater for firms that separate the roles of Chairman and CEO. However, the evidence shows that earnings informativeness does not vary with board size and board composition.