CEO tenure and earnings management

Ashiq Ali and Weining Zhang

Journal of Accounting and Economics, 2015, vol. 59, issue 1, 60-79

Abstract: This study examines changes in CEOs׳ incentive to manage their firms׳ reported earnings during their tenure. Earnings overstatement is greater in the early years than in the later years of CEOs׳ service, and this relation is less pronounced for firms with greater external and internal monitoring. These results suggest that new CEOs try to favorably influence the market׳s perception of their ability in their early years of service, when the market is more uncertain. Also, consistent with the horizon problem, earnings overstatement is greater in the CEOs׳ final year, but this result obtains only after controlling for earnings overstatement in their early years of service.

Keywords: CEO career concerns; CEO reputation; Horizon problem of departing CEOs; Earnings management (search for similar items in EconPapers)
JEL-codes: G3 M41 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (160)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:59:y:2015:i:1:p:60-79

DOI: 10.1016/j.jacceco.2014.11.004

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