The effect of board structure on the quality of MD&A disclosure

This study examines if the structure of board of directors affects the quality of Management Discussion and Analysis (MD&A). Prior studies suggest that the board structure should have a positive impact on the quality of voluntary disclosure. We test this research question using a unique set of data from Korea. We collect the sample firms listed in the Korean Stock Exchange from 2010 to 2014. Our two variables of board structure are CEO separation and independence of board of directors. We regress the quality of MD&A on CEO separation and independence of board of directors with other control variables. We find evidence that the separation between CEO and board chairman is associated with high quality of MD&A disclosure. We also find that the independence of board of directors has a positive impact on the quality of MD&A disclosure. This is consistent with our prediction that the board of directors has a monitoring role in corporate disclosures. The findings in this study contribute to the literature by extending our understanding of the effect of board of directors on financial reporting. However, we limit our scope of the study in the roles of board of directors. Further study should explore other factors affecting the corporate disclosures.