CEO Profile and Earnings Quality

51 Pages Posted: 12 Dec 2016 Last revised: 9 Jan 2019

See all articles by Tri Nguyen

Tri Nguyen

University of East London - Royal Docks School of Business and Law; University of Economics Ho Chi Minh City - School of Accounting

Chau Duong

University of East London - Royal Docks Business School

Suneetha Narendran

University of East London - Royal Docks Business School

Date Written: December 10, 2016

Abstract

This paper introduces the PSCORE, which aggregates nine personal characteristics of chief executive officers, to signal the quality of earnings. The PSCORE is a composite score based on publicly available data on CEOs. We find strong positive correlations between the PSCORE and the levels of discretionary accruals, a proxy for earnings quality. The findings also indicate that the PSCORE is positively correlated with financial statement errors, measured by the deviations of the first digits of figures reported in financial statements from what are expected by Benford’s Law. The associations remain statistically significant after controlling some important determinants of earnings quality and are not affected by confounding factors. We suggest some implications for practitioners.

Keywords: Earnings Quality; Benford’s Law; Chief Executive Officers

Suggested Citation

Nguyen, Tri and Duong, Chau and Narendran, Suneetha, CEO Profile and Earnings Quality (December 10, 2016). Available at SSRN: https://ssrn.com/abstract=2883503 or http://dx.doi.org/10.2139/ssrn.2883503

Tri Nguyen (Contact Author)

University of East London - Royal Docks School of Business and Law ( email )

4-6 University Way
London, E16 2RD
United Kingdom

University of Economics Ho Chi Minh City - School of Accounting ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Chau Duong

University of East London - Royal Docks Business School ( email )

4-6 University Way
London, E16 2RD
United Kingdom

Suneetha Narendran

University of East London - Royal Docks Business School ( email )

4-6 University Way
London, E16 2RD
United Kingdom

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