Beasley (1996) examines whether the larger percentage of outside directors on the board can significantly decrease the financial fraud. This study treats financial fraud as thedependent variable and examines 75 companies convicted with financial fraud comparedto 75 companies with no fraud indictments. First, he finds that outside directors can
significantly reduce the possibility of financial fraud. Second, the existence of an audit committee does not significantly decrease the likelihood of financial fraud. Third, as the outside directors’ shareholdings proportion and length of time on the board increase, thepossibility of financial fraud decreases.