CEO Profile and Earnings Quality

Forthcoming, Review of Quantitative Finance and Accounting

51 Pages Posted: 12 Dec 2016 Last revised: 17 Jul 2020

See all articles by Tri Tri Nguyen

Tri Tri Nguyen

University of Roehampton

Chau Minh Duong

Canterbury Christ Church University

Sunitha Narendran

affiliation not provided to SSRN

Date Written: July 17, 2020

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, (i) discretionary accruals and (ii) 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

JEL Classification: G34, M41

Suggested Citation

Nguyen, Tri Tri and Duong, Chau Minh and Narendran, Sunitha, CEO Profile and Earnings Quality (July 17, 2020). Forthcoming, Review of Quantitative Finance and Accounting, Available at SSRN: https://ssrn.com/abstract=2883503 or http://dx.doi.org/10.2139/ssrn.2883503

Tri Tri Nguyen (Contact Author)

University of Roehampton ( email )

Roehampton Lane
London, SW15 5SL
United Kingdom

Chau Minh Duong

Canterbury Christ Church University ( email )

United Kingdom

Sunitha Narendran

affiliation not provided to SSRN

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