Does the CEO’s financial and accounting expertise affect the financial reporting quality? Evidence from an emerging economy

Abstract

Purpose This study aims to analyse the role of the financial and accounting expertise of the chief executive officer (CEO) on financial reporting quality (FRQ) in an emerging economy. Design/methodology/approach This study is based on data collected from a large sample of all non-financial companies listed on Vietnamese stock exchanges during the period 2016–2020 with 2,435 observations. FEM-ROBUST standard errors regression model is used to examine the relationship between the financial, accounting expertise of CEOs and FRQ through earnings management by discretionary accruals. Findings The results show that CEOs with financial and accounting expertise have more influence and intervention on earnings management and thus adversely affect FRQ. This behaviour is explained by the fact that CEOs not only have a firm grasp of financial and accounting policies but also know the tricks to interfere with earnings management. Moreover, in the context of emerging economies, CEOs’ awareness and management level are still limited and legal sanctions are not yet strict, so when they have power in their hands, CEOs immediately find ways to build a reputation to enhance the power and earnings for the CEOs themselves. Research limitations/implications The limitation of this study is first of all that the research data are not complete and rich because the companies are prohibited from disclosing information and the cooperation relationship is not close. Next is the new research in only one emerging market – Vietnam – so the generalizability is not high. Originality/value To the best of the authors’ knowledge, this is the first study to examine the impact of CEOs’ accounting and finance expertise on FRQ in an emerging economy, contributing to the existing literature regarding the scientific debates about CEOs, CEO characteristics, earnings management and FRQ.

Gender Diversity dan Keahlian Keuangan Komite Audit dalam Memprediksi Financial Statement Fraud

“…Akibat dari tindakan fraud yang buruk mendorong beberapa peneliti melakukan penelitian mengenai faktor faktor terjadinya fraud diantaranya (Davidson, 2022;Nhat et al, 2022;Wang et al, 2022). Penelitian sebelumnya berfokus pada faktor penyebab fraud dengan variabel seperti keragaman gender, whistle blowing, keahlian keuangan, kinerja keuangan, profitabilitas, namun beberapa temuan tidak konsisten.…”

“…(Wang et al, 2022) menemukan bahwa wanita meningkatkan deteksi penipuan sehingga mengurangi perusahaan yang terlibat penipuan. Demikian juga keahlian keuangan memiliki dampak positif pada tindakan fraud (Nhat et al, 2022).…”

“…Sehingga membantu pengambilan keputusan. Dengan pengalaman kerja dan keahlian keuangan yang dimiliki menentukan pada pilihan strategis perusahaan (Nhat et al, 2022). Keahlian keuangan akan membantu tugas dan fungsi komite audit.…”

“…Wolf dan Hermanson mengatakan bahwa terjadinya tindakan fraud disebabkan karena capability atau kemampuan yang dimiliki seseorang. (Nhat et al, 2022) mengatakan bahwa keahlian keuangan yang dimiliki akan membuat perusahaan semakin meningkatkan pengawasan. Kemungkinan menghasilkan financial statement fraud dipengaruhi oleh kompetensi yang dimiliki (Suhartono, 2020).…”

Ceo Facial Masculinity, Characteristics and Earnings Management

“…In the same context, Plumlee and Yohn (2010) advocated that CEOs with greater experience can effectively forecast future earnings and assets for the unit, as well as comprehend and apply legislation, regimes, and generally accepted accounting standards to create financial statements in the future. Ngo and Nguyen (2022) indicated that CEOs with financial accounting knowledge, on the other hand, gain greater confidence than novice CEOs, leading them to forecast higher profitability and apply positive accounting theories to achieve their goals. Their findings revealed that CEOs with financial and accounting backgrounds have more impact and intervention in earnings management, lowering FRQ.…”