Value or Glamour? An Empirical Investigation of the Effect of Celebrity CEOs on Financial Reporting Practices and Firm Performance

31 Pages Posted: 4 May 2011

See all articles by Kevin Koh

Kevin Koh

Nanyang Technological University (NTU) - Nanyang Business School

Date Written: June 2011

Abstract

In this study, I investigate the impact of managerial reputation, as proxied by high-profile awards to CEOs, on financial reporting practices and firm performance. Using a sample of 269 awards given to 189 celebrity CEOs (CEOs who win awards) from 1987 to 2003, I compare within-firm changes in financial reporting practices and firm performance before and after each CEO wins their first award. I find that celebrity CEOs engage in more conservative accounting practices and are less likely to engage in opportunistic earnings management to meet short-term earnings benchmarks. In addition, firm performance improves after celebrity CEOs win awards.

Keywords: CEO reputation, Accounting conservatism, Earnings management

JEL Classification: G10, M41, M50

Suggested Citation

Koh, Kevin, Value or Glamour? An Empirical Investigation of the Effect of Celebrity CEOs on Financial Reporting Practices and Firm Performance (June 2011). Accounting & Finance, Vol. 51, Issue 2, pp. 517-547, 2011, Available at SSRN: https://ssrn.com/abstract=1830923 or http://dx.doi.org/10.1111/j.1467-629X.2010.00357.x

Kevin Koh (Contact Author)

Nanyang Technological University (NTU) - Nanyang Business School ( email )

S3-B2C-96, Nanyang Avenue
Nanyang Business School , NTU
Singapore, 639798
Singapore
(+65) 6790 4096 (Phone)

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