The Role of Independent Directors in Mitigating Material Misstatement Risk: Evidence from Chinese A-Share Listed Companies

In the context of increasing regulatory scrutiny and persistent concerns over financial reporting quality, this study investigates the impact of independent directors’ supervisory behavior and personal characteristics on the risk of material misstatement among Chinese A-share listed companies from 2014 to 2023. Using audit opinions as a proxy for misstatement risk, we assess the effectiveness of independent directors through performance metrics—such as board meeting attendance and dissenting behavior—and background attributes including gender, age, and professional expertise. The empirical results reveal that while dissenting behavior is significantly and positively associated with material misstatements, meeting attendance and gender composition show no significant influence. Notably, older directors demonstrate a risk-mitigating effect, whereas directors with accounting and financial backgrounds unexpectedly correlate with higher misstatement risks, suggesting the presence of symbolic appointments or compromised independence. Industry-specific analyses further show that the governance role of independent directors varies significantly across sectors. These findings offer nuanced insights into the real supervisory impact of independent directors and provide policy implications for improving board effectiveness in emerging markets.