Board Independence, Accounting Conservatism, Investments Opportunity -Empirical Evidence from Chinese Listed Companies

Prior studies document mixed evidence on the efficacy of independent directors. Different from prior studies, as an important environmental factor, investment opportunity is adopted to explain the mixed impact of independent directors on accounting conservatism for China listed companies. This paper documents (1) no significant association between accounting conservatism and the percentage of independent director on board (2) positive association of accounting conservatism with the percentage of independent directors on the board for Non High investment opportunity firms. Such association declines significantly when investment opportunity increases. These findings potentially explain the mixed evidence in prior studies regarding the monitoring efficacy of independent directors.