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2543As a communication bridge between listed companies and external stakeholders, information disclosure and investor relation management are the most important functions of board secretaries. According to the upper-echelons theory, the duty performance and behavioral decisions of board secretaries are affected by their background characteristics. In view of the serious consequences of financial restatements and their frequent occurrence, the search for the causes of financial restatements has become the focus of attention in practical and academic circles. The existing literature usually studies both internal and external factors, but little attention has been paid to the possible role played by board secretaries — the combination of aforementioned internal and external governance mechanisms, the intermediary in the information disclosure process, and the information publisher, in financial restatements. Therefore, this paper examines whether board secretaries with media experience can reduce financial restatement behaviors.
Using the Logit regression model, this paper selects all the non-financial listed companies in Shanghai and Shenzhen Stock Exchanges from 2001 to 2020 as the research sample, and finds that companies have significantly less financial restatement behaviors when their board secretaries have media experience. After a series of robustness tests and endogeneity tests, the above finding still holds. Further research finds that increased news media coverage and increased accuracy of voluntary disclosure are two possible channels. Finally, this paper finds that stakeholders in the capital market make a positive response to this. Specifically, board secretaries with media experience have higher valuation of their companies and lower financing costs of both equity and debt capital.
This paper suggests that the unique professional characteristics of the media industry may motivate media professionals to remain independent and impartial in their role as the board secretary and play an important role in information disclosure. It not only supplements the literature on the impact of board secretaries’ professional background on information disclosure, but also expands the literature in the field of upper-echelons theory, and enriches the literature related to financial restatements. In practice, the findings suggest that the active role of board secretaries needs to be emphasized and brought into play in corporate governance, and professional background and experience should be carefully considered when hiring board secretaries, so as to better serve corporate governance and better perform the functions of board secretaries in information disclosure and investor relation management.
