Do CEO’s Characteristics Affect Earnings Management? Evidence from France

39 Pages Posted: 12 Jun 2012

See all articles by Zeineb Zouari

Zeineb Zouari

University of Sousse

Faten Lakhal

Université Paris XII

Mehdi Nekhili

Université du Maine; ICD International Business School; Université du Maine

Date Written: June 11, 2012

Abstract

This study attempts to add to the small body of existing literature relating the CEO characteristics to earnings management. Our research is carried out on 153 French listed companies over the year 2008. Using discretionary accruals as proxy for earnings management, we find a significant positive relationship between CEO characteristics and earnings management, suggesting that as reputed CEO is well compensated, he is more afraid to lose his compensation level, therefore his incentive to manipulate firm’s earnings increases. Findings also indicate that the dual CEO-chairman relationship advances CEO to manage earnings, particularly when the CEO-chairman holds the major proportion of equity ownership in the firm. This finding suggests that CEO-chair accumulates his managerial power and lack of control to extract private yields. Finally, results come up with new evidence on the relation between CEO expertise and earnings management. It shows that expertise affects positively CEO’s behavior to use agressive earnings management.

Keywords: CEO Reputation, Duality, Ownership, Expertise, Earnings Management

JEL Classification: G30, M41

Suggested Citation

Zouari, Zeineb and Lakhal, Faten and Nekhili, Mehdi, Do CEO’s Characteristics Affect Earnings Management? Evidence from France (June 11, 2012). Available at SSRN: https://ssrn.com/abstract=2082009 or http://dx.doi.org/10.2139/ssrn.2082009

Zeineb Zouari (Contact Author)

University of Sousse ( email )

Route Hzamia Sahloul 3
BP n° 40
Sousse, 4054
Tunisia

Faten Lakhal

Université Paris XII ( email )

61 Av. du Général de Gaulle
Créteil Cedex, 94009
France

Mehdi Nekhili

Université du Maine ( email )

72085 Le Mans Cedex 9
France

ICD International Business School

12 rue Alexandre Parodi
Paris, 75010
France

Université du Maine ( email )

72085 Le Mans Cedex 9
France

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