Financial Expert CEOs and Earnings Management around Initial Public Offerings

Research output: Contribution to journalArticle

Abstract

This study examines the association between financial expert CEOs and earnings management (EM) around initial public offerings. We identify financial expert CEOs as those having past experience in either banking or investment firms, large auditing firms, or finance-related roles. We find strong evidence that newly listed firms with financial expert CEOs are less likely to engage in either accrual-based or real EM in the offering year than those with non-financial expert CEOs. In particular, our results are robust after controlling for the potential selection issue that occurs due to non-random matching of CEOs to firms. In addition, we employ alternative measures of financial expertise, including past experience in a CFO position, financial experience variety, and professional qualifications. We document that CEOs who used to work as CFOs and those who gained varied financial experience are less likely to manage earnings through both accruals and real activities. Moreover, CEOs who have a professional qualification in finance and/or accounting are also associated with lower accrual-based EM.
LanguageEnglish
Pages102-117
Number of pages16
JournalInternational Journal of Accounting
Volume53
Issue number2
Early online date19 May 2018
DOIs
StatusPublished - 1 Jun 2018

Fingerprint

Initial public offerings
Chief executive officer
Earnings management
Qualification
Finance
Large firms
Auditing
Banking
Firm investment
Financial expertise
Real activity
Accruals

Keywords

  • CEOs
  • Earnings management
  • Financial expertise
  • IPOs

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

Financial Expert CEOs and Earnings Management around Initial Public Offerings. / Gounopoulos, Dimitrios; Pham, Hang.

In: International Journal of Accounting, Vol. 53, No. 2, 01.06.2018, p. 102-117.

Research output: Contribution to journalArticle

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