This study examines whether connected boards of directors restore their reputation via conservative accounting after financial misstatements. Using a sample of restating firms from 2004 to 2020, we find central boards of directors are positively related to accounting conservatism in the post-restatement period. More importantly, we find accounting conservatism has positive effects on the reputation restoration of directors in central boards, leading to more prestigious board seats, additional outside directorships, and higher compensation following restatements. The reputation recovery of directors in central boards is more prominent among restating firms that seek external financing where potential benefits of director reputation are greater. The findings suggest that directors in central boards successfully recover their damaged reputation via conservative accounting after restatements and minimize adverse consequences in the director market. Our robustness tests support the causal interpretation of our evidence. Collectively, our study offers novel insights into the monitoring incentives resulted from the reputation restoration of directors in central boards via conservative accounting after financial reporting failures.

中文翻译：

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董事网络、会计稳健性和董事声誉：财务报告失败后的证据


本研究探讨了关联董事会在财务错报后是否可以通过保守会计来恢复声誉。使用2004年至2020年重述公司的样本，我们发现中央董事会与重述后时期的会计稳健性呈正相关。更重要的是，我们发现会计稳健性对中央董事会董事声誉的恢复具有积极影响，从而导致更有声望的董事会席位、额外的外部董事职位以及重述后更高的薪酬。在寻求外部融资的重述公司中，中央董事会董事的声誉恢复更为突出，因为董事声誉的潜在利益更大。研究结果表明，中央董事会的董事通过重述后的保守会计成功地恢复了受损的声誉，并最大限度地减少了董事市场的不利后果。我们的稳健性测试支持我们证据的因果解释。总的来说，我们的研究为财务报告失败后通过保守的会计方法恢复中央董事会董事的声誉所产生的监控激励提供了新颖的见解。