Woranuch Kuutha, Pattanant Petchchedchoo, Siridech Kumsuprom, Panarat Panmanee
The objectives of this research were 1) to study the relationship among political connections of the Board of Directors, the Board of the Audit Committee and the Board of Committee on Nomination and Remuneration and 2) to study the influence of the political connections among the board members on accounting conservatism. Sixty seven companies listed on the Stock Exchange of Thailand (SET 100), were taken as a case study. The number of firm-year observations for which the required data was 335 from the period 2015-2019. The statistical analysis involved the Path Analysis and the Structural Equation Modeling (SEM).
The results revealed that 1) the political connection of the Board of Directors has a positive influence on the Board of the Audit Committee and the Committee on Nomination and Remuneration. Political connections of the three committee members are related and mutual benefit, whether it is familiarity or considerate that affects the performance of the mission according to the needs of individuals or groups. It is also easy to administer the work and decisions from the Board of Directors, including the protection and assistance beneficial to the owners or shareholders. 2) Political connections of the Board of Directors and the Committee on Nomination and Remuneration have positive influence on accounting conservatism. This demonstrated that corporations with political connections should be cautioned their accounting practices in order to gain credibility and to convey corporate transparency or entity, or they might have an incentive to conceal other interests gained from political connections, escaping from the press and the public censure and scrutiny. Moreover, that political connection of the Audit Committee does not influence to accounting conservatism.