Managers: Their Effects on Accruals and Firm Policies

Journal of Business Finance & Accounting, Forthcoming

54 Pages Posted: 26 Aug 2009 Last revised: 15 Aug 2017

See all articles by Douglas V. DeJong

Douglas V. DeJong

University of Iowa - Tippie College of Business

Zhejia Ling

California State University, Fullerton

Multiple version iconThere are 2 versions of this paper

Date Written: November 11, 2012

Abstract

This paper investigates whether top executives have significant individual-specific effects on accruals that cannot be explained by firm characteristics. Exploiting 37 years of individual executive and firm data, we find that individual executives play a significant role in determining firms’ accruals. We examine whether executives’ effects on accruals are related to their personal styles on firm policies, investment, financing and operating decisions. Our results show that individual executives’ effects on accruals are more correlated with their operating decisions than investment and financing decisions. We next investigate whether managers also have a personal style for directly affecting accruals, themselves. We compare effects exerted by CEOs to CFOs. We find CEOs are more likely to affect accruals through firm policy decisions and CFOs are more likely to affect accruals through accounting decisions. CFOs tend to report more “solid” earnings than CEOs, i.e., CFOs are more likely to push accruals to zero.

Keywords: Accruals, Manager Effects

JEL Classification: G30, M41

Suggested Citation

DeJong, Douglas V. and Ling, Zhejia, Managers: Their Effects on Accruals and Firm Policies (November 11, 2012). Journal of Business Finance & Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1460298 or http://dx.doi.org/10.2139/ssrn.1460298

Douglas V. DeJong (Contact Author)

University of Iowa - Tippie College of Business ( email )

108 Pappajohn Business Building
Iowa City, IA 52242-1000
United States
319-335-0919 (Phone)

Zhejia Ling

California State University, Fullerton ( email )

Department of Accounting
College of Business and Economic
Fullerton, CA California 92834
United States

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