In this study, we investigated how the characteristics of independent directors influence the quality of financial reporting. Our results indicate that hiring independent directors with financial expertise or a higher educational background for the board of directors of a corporation can help to alleviate the need to restate financial reports. In cases where the board of directors includes independent directors with greater seniority or a larger number of part-time positions, the absolute value of discretionary accruals for the corporation will tend to be lower. Finally, in cases where independent directors have greater seniority and a professional background in law or have a greater number of part-time positions and strong educational background, their firms tend to receive higher ratings in their evaluations related to the disclosure of information, which means that the financial information they provide will tend to display greater transparency.
The samples in this study were further divided into those that were listed before and those that were listed after the revision of review criteria, thereby revealing that in the samples that included earnings management as well as those of information disclosure that established independent directors after 2002 according to the review criteria, the characteristics of independent directors had a more positive influence on the quality of financial reporting. This is a clear demonstration that legally mandating the establishment of independent directors is necessary. These findings provide a valuable reference for corporations seeking to hire independent directors in the future and may assist companies in finding talent to reinforce the independent director system in Taiwan.