Effect of Board Composition on Informativeness and Quality of Earnings: Evidence from Companies Listed in Tehran Stock Exchange

This study investigates the effect of board composition on the informativeness and quality of earnings in the companies listed in Tehran Stock Exchange. The study sample was 100 firms over the period 2005-2012. The statistical methodology that is used to test the hypothesis is panel data. The findings show no significant relationship between informativeness of earning and outside directors and board size. The findings also show that firms with a higher proportion of outside members of board do not prove to be more conservative when reporting bad news. Additionally، they do not display greater time-liness on the recognition of good news. Also، after examining the relationship between earning quality that is measured by accruals and proportion of outside members of board، we found the firms with higher proportion of outside members of board report earnings of higher quality compared to the firms with lower proportion of outside members of board.