Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management and Agency Theory
Wallace N. Davidson III
Southern Illinois University at Carbondale - Department of Finance
Pennsylvania State University - SGPS; National Institute of Development Administration (NIDA), Bangkok, Thailand
Young Sang Kim
Northern Kentucky University - Haile/US Bank College of Business
Southern Oregon University - School of Business
Academy of Management Journal, Vol. 47, April 2004
Impression and earnings management were explored via reasoning and methods grounded in ethnostatistics and agency theory. We hypothesized that earnings management occurs more frequently following duality-creating successions than otherwise because CEO-chairs have greater control of the impressions created by their firms' financial reports and are operating under greater expectations of positive results. Using a sample of 173 duality-creating succession announcements and 112 non-duality-creating succession announcements, we obtained empirical results consistent with these predictions.
Keywords: Earnings management, duality, agency theory
JEL Classification: G30, G34Accepted Paper Series
Date posted: February 16, 2005
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