CEO profile and earnings quality

Tri Tri Nguyen (), Chau Minh Duong () and Sunitha Narendran ()
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Tri Tri Nguyen: University of Brighton
Chau Minh Duong: University of East London
Sunitha Narendran: University of Roehampton

Review of Quantitative Finance and Accounting, 2021, vol. 56, issue 3, No 7, 987-1025

Abstract: Abstract This paper introduces the PSCORE, which aggregates nine personal characteristics of chief executive officers (CEOs), to signal the quality of earnings. The PSCORE is a composite score based on publicly available data on CEOs. The study reports strong positive relationships between the PSCORE and two different proxies for earnings quality, (1) discretionary accruals and (2) financial statement errors, measured by deviations of the first digits of figures reported in financial statements from those expected by Benford’s Law. Further analyses indicate that the relationships between the PSCORE and the proxies for earnings quality become more pronounced when CEOs have high equity-based compensation incentives. The findings have some implications for practitioners.

Keywords: Earnings quality; Benford’s law; Chief executive officers (search for similar items in EconPapers)
JEL-codes: G34 M41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11156-020-00916-7

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