Top Management Team Characteristics and Accrual-Based Earnings Management

Hsieh, Yu Ting; Chen, Tsung-Kang; Tseng, Yi Jie; Lin, Ruey Ching

doi:10.1016/j.intacc.2018.11.004

Cited by 26 publications

(32 citation statements)

References 49 publications

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“…Dechow et al (2011) and others use the list of SEC enforcement actions to identify a sample of firms engaging in accruals misstatements and try to predict characteristics of misstating firms using F-statistics to get rid of chances of Type I errors in the model. Li (2019), Hsieh et al (2018) and Lewellen and Resutek (2019) again emphasize for our paper the importance of accrual-based earnings management in unravelling corporate governance because of the low persistence of accruals and their direct linkages with managerial incentives and managerial background while Ozili (2018) and Dayanandan and Sra (2018) confirm effective procyclical governance using accrual based earnings management and their obvious value relevance.…”

Section: Literature Reviewmentioning

confidence: 60%

“…Crisis response will be heightened in Indian firms because of the pressures of growth. Hsieh et al (2018) finds in an emerging market sample that the firms' executive leadership defines its earnings management levels effectively moderated by the presence of founders. Emerging markets in Asia therefore balance between curbing earnings manipulation because of the educational backgrounds of top management whilst managing the trade off with entrenchment hypothesis Hypothesis 3: Both Banking firms and Non-Financial firms will exhibit complementary earnings management strategies.…”

Section: Hypothesesmentioning

confidence: 99%

“…However, this might be significant evidence of Opportunistic Accruals management if the direction of the accruals is higher in the post crises year. Earnings management in emerging markets with robust markets and investor protection regimes is significantly affected by growth and management skills (Hsieh et al 2018)…”

Section: Hypothesesmentioning

confidence: 99%

See 2 more Smart Citations

How do Indian firms cope with a crisis? - Earnings management characteristics of CNX Nifty 100 companies

Mittal

Garg

2019

AJFA

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An analysis of Indian CNX Nifty 100 companies uncovers the perils of opportunistic earnings management as crises affect balance sheets in FY2007 and FY2012, recession years around the Global Financial crisis. Only a small portion of the companies engage in sophisticated earnings management commensurate with performance.Operating accruals of the firm are synonymous with its Working Capital investment. These accruals measure Working Capital dependencies in financing growth and should instantiate on PPE investments. The Modified Jones model is measured for the sample of CNX 100 companies including Banks and a DID approach used to compare data before and after a crisis year.Indian firms show only a 2% level of accruals, but more than 30% firm years show significantly higher accruals in growth years. The study proves indications of Performance measurement hypothesis yet primarily only Opportunistic accruals with negative correlation between Post crisis and pre-crisis accruals and accruals increasing in the post crisis year. Accruals are significantly incident on sales in the pre-crisis years.The presence of negative accruals may show effects of high growth and slack corporate governance. Banking firms respond with a more sophisticated earnings management strategy. Discretionary Loan Loss provisions significantly increase with increase in Cash profits. These Operating accruals of the firm are synonymous with its Working Capital investment.

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Section: Literature Reviewmentioning

confidence: 60%

Section: Hypothesesmentioning

confidence: 99%

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How do Indian firms cope with a crisis? - Earnings management characteristics of CNX Nifty 100 companies

Mittal

Garg

2019

AJFA

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“…MS&R includes three variables. The first is the size of the top management team (TSIZE), which is the number of all executive members disclosed in a firm's annual report, consistent with the definition provided by Li et al (2016) and Hsieh et al (2018). The remaining two variables are management team reputation measures, including the proportion of management team members who serve as directors of other firms' boards (BOARD) or sit on non-profit corporate boards (BNP).…”

Section: Measures Of Management Team Size and Reputation And Firm Locmentioning

confidence: 99%

“…4 One explanation for this finding is that the management team defined in our study is broader than that defined in Chemmanur et al (2009) using U.S. data. We refer to Hsieh et al (2018) and define the management team as all the executive officers disclosed in a firm's annual report. 5 In contrast, Chemmanur et al (2009) use U.S. data and define the management team as the disclosed executive officers with a rank of vice president or higher.…”

Section: Sample Distribution and Summary Statisticsmentioning

confidence: 99%

Does Firm Location Affect Management Team Size and Reputation? Evidence from Taiwan*☆

Chen

Tseng

Hsieh

et al. 2020

Asia-Pac J of Fin Stud

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This study explores the effect of the location of a firm’s headquarters on the firm’s management team size and reputation (MS&R) in a geographically small country (i.e., Taiwan) with numerous founding family firms. The results show that firm location quality positively relates to MS&R, and the association becomes weaker when firm profitability is higher or the founding family is present in the firm. Furthermore, the effect of firm location quality on management team reputation (team size) becomes stronger (weaker) when the CEO position is held by the founding family. Finally, the results are robust when considering endogeneity issues and other model settings.

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Age diversity of audit committee financial experts, ownership structure and earnings management: Evidence from China

et al. 2021

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The extant literature has shown the impact of demographic characteristics such as gender of audit committee members on earnings management but ignored the importance of the board room's age diversity. Going beyond the prior literature, our study aims to examine how the age diversity of audit committee financial experts (ACFEs) influences the financial reporting quality of Chinese non-financial firms. We found a negative relationship between ACFEs' age diversity and earning management. Our findings also show that younger ACFEs mitigate earnings management as compared to older ACFEs. We further examined this relationship among state-owned enterprises (SOEs) and privately-owned enterprises in China and confirmed that the age diversity of ACFEs influences earnings management differently. However, younger ACFEs working in SOEs mitigates earnings management than their counterpart in privately-owned companies. Our result maintains its robustness after controlling for endogeneity and employing a different measure of earnings management. Our result has relevance for selecting financial experts and the overall composition of the audit committee, showing that including younger ACFEs will ensure more efficient control of firms' management. This finding is also relevant for policymakers, especially Chinese regulators, offering them insight into promoting audit committee effectiveness.

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Top Management Team Characteristics and Accrual-Based Earnings Management

Cited by 26 publications

References 49 publications

How do Indian firms cope with a crisis? - Earnings management characteristics of CNX Nifty 100 companies

How do Indian firms cope with a crisis? - Earnings management characteristics of CNX Nifty 100 companies

Does Firm Location Affect Management Team Size and Reputation? Evidence from Taiwan*☆

Age diversity of audit committee financial experts, ownership structure and earnings management: Evidence from China

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