The Influence of Independent Director Characteristics on Financial Fraud Based on A-share Listed Companies

Abstract

Recently, independent directors have attracted the attention of scholars, and the possible impact of their different characteristics has become a hot research topic. The frequent occurrence of financial fraud incidents has stimulated academic circles to think about the corporate fraud. In this context, this article’s sample is the A-shared public company in China for 10 years. By accessing to consult relevant literature, hypotheses are proposed and logistic regression models are established. For a more comprehensive consideration, the study not only considers the effects of the individual characteristic but also builds a comprehensive indicator. It can be seen from the outcomes that independent directors’ comprehensive characteristics and financial fraud are significantly negatively correlated. Female and highly educated independent directors, and those with academic, financial and accounting background play an important role in reducing the company's financial fraud. Based on this, diversification and overall consideration of independent directors cannot be ignored. This is helpful for strengthening corporate governance and reducing financial fraud.