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Co‐opted Boards and the Obfuscation of Financial Reports

Abongeh A. Tunyi et al.

Abacus2025https://doi.org/10.1111/abac.12366article
AJG 3ABDC A
Weight
0.52

Abstract

This study investigates the relationship between board co‐option and the obfuscation of financial disclosures in a comprehensive sample of 9,620 10‐K filings by 1,076 US‐listed firms between 1996 and 2018. Our empirical results are consistent with our hypotheses that board co‐option partly explains the obfuscation of financial reports. Ex‐post tests reveal that the co‐option effect is most pronounced in firms led by less able managers and is attenuated in the presence of a female CEO. Our findings are consistent with a stakeholder‐agency perspective as they suggest that board capture weakens the ability of directors to discharge their fiduciary duties, particularly the provision of readable financial statements to stakeholders. Our results are robust to the use of alternative co‐option measures, obfuscation metrics, model specifications, and potential endogeneity concerns. Overall, we contribute to the growing literature on financial statement readability by underscoring the critical role of effective monitoring in shaping the quality of firms’ communication with stakeholders. Our results have important implications for governance regulation and policy.

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https://doi.org/https://doi.org/10.1111/abac.12366

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@article{abongeh2025,
  title        = {{Co‐opted Boards and the Obfuscation of Financial Reports}},
  author       = {Abongeh A. Tunyi et al.},
  journal      = {Abacus},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/abac.12366},
}

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Evidence weight

0.52

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.47 × 0.4 = 0.19
M · momentum0.68 × 0.15 = 0.10
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.