Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management and Agency Theory

25 Pages Posted: 7 Oct 2009  

Wallace N. Davidson III

Southern Illinois University at Carbondale - Department of Finance

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Young Sang Kim

Northern Kentucky University - Haile/US Bank College of Business

Carol Nemec

Southern Oregon University - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 7, 2004

Abstract

We relate impression and earnings management to the field of ethnostatistics, the study of how statistics are produced and managed. By further linking impression management and agency theory, we show that earnings management may exacerbate agency problems. We hypothesize that earnings-increasing earnings management occurs more frequently following duality-creating successions than otherwise. A dual CEO/Chair would have greater authority to control the impression the company wants to make with its financial reports and may also be operating with greater expectations to produce positive results. Using a sample of 173 duality-creating succession announcements and 112 non-duality creating succession announcements, we find empirical results consistent with this hypothesis.

Keywords: Earnings mangement, CEO duality, Impression management

JEL Classification: G30, G34, M41

Suggested Citation

Davidson, Wallace N. and Jiraporn, Pornsit and Kim, Young Sang and Nemec, Carol, Earnings Management Following Duality-Creating Successions: Ethnostatistics, Impression Management and Agency Theory (January 7, 2004). Available at SSRN: https://ssrn.com/abstract=1483765 or http://dx.doi.org/10.2139/ssrn.1483765

Wallace N. Davidson III

Southern Illinois University at Carbondale - Department of Finance ( email )

Mail Code 4626
Carbondale, IL 62901-4626
United States
618-453-1429 (Phone)
618-453-5626 (Fax)

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Young Sang Kim

Northern Kentucky University - Haile/US Bank College of Business ( email )

Dept of Economics and Finance
Highland Heights, KY 41099
United States
859-572-5160 (Phone)
859-572-6627 (Fax)

Carol Nemec

Southern Oregon University - School of Business ( email )

1250 Siskiyou Boulevard
Ashland, OR 97520-5022
United States

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