Abstract

This study empirically examines the relationship between reliability of accounting information and firm’s investment in human resources responsible for corporate governance. The sample of this study consists of all KOSPI－listed companies that disclosed its human resourcesin charge of corporate governance from 2002 to 2008. To proxy human resources in corporate governance we created three variables：the ratio of total workers to human resources for corporate governance, a dummy variable indicating existence of CPA in a firm, and years of experience a person in charge has. As for reliability of accounting information, we gave it a value of 1 if a firm received FSS enforcement action and 0 if it did not. Our empirical result shows no association between the ratio of total works to human reresources in corporate governance. However, there was a statistically significant negative association between the years of experience and FSS enforcement action. The result indicates that years of experience contribute to the reliability of accounting information by strengthening internal monitoring. and we also have analyzed the interaction effect between qualitative characteristics and quantiative characteristics. The results show that firms which has more human resources and higher experience are effective to reduce the matters on FSS enforcement action. In the additional test, We found that this effect is strogner for firms with relatively small size,indicating that small sized firms need more experienced human resources in corporate governance to maintain effective corporate governance. Finally, Our results show that experience of human resources in the area of accounting has strongest influence in reducing the possibility of FSS enforcement action than any other areas. This study is different from prior researches in two aspects. One, this study concentrated on the effect of human resources in corporate governance on corporate governance. And two, this study uses more direct measure for reliabilty of accounting information, which is FSS enforcement action.

Keywords

• Internal
• FSS enforcement action

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