This study investigated companies publicly listed in Taiwan from 2002 to 2010 to
examine whether independent directors improve the quality of earnings and analyzed
whether the control rights of a controlling shareholder mitigate the impact of independent
directors on earnings quality. Empirical results showed that independent directors can
improve the quality of earnings, and those hired because of mandatory appointments had
a greater positive effect on earnings quality compared to directors who were voluntarily
hired. In addition, we also found that the controlling share held by a controlling
shareholder reduces the benefit of independent directors on earnings quality.
