Managerial Academic Experience, External Monitoring and Financial Reporting Quality

36 Pages Posted: 27 May 2020

See all articles by Zhiming Ma

Zhiming Ma

Peking University

Kirill Novoselov

Shanghai University of Finance and Economics

Kaitang Zhou

School of Economics and Management, Wuhan University

Yi Zhou

Fudan University

Multiple version iconThere are 2 versions of this paper

Date Written: July/August 2019

Abstract

This study examines the effect of managerial academic experience on firms’ financial reporting quality. Using data from China, we find that firms with top managers possessing academic experience exhibit lower levels of both accrual and real earnings management, along with a lower probability of future restatements. This effect is more pronounced for firms with inefficient external monitoring, suggesting that the higher financial reporting quality is mainly explained by the managers’ intrinsic motivation to report truthfully. The results hold when we use firm fixed‐effect regressions, instrumental variable two‐stage regressions, and a propensity score matching (PSM) approach to mitigate the omitted variable and endogeneity concerns. Our study suggests that academic experience can serve as a source of valuable expertise for corporate executives.

Keywords: academic experience, earnings management, expertise, external monitoring, financial reporting quality, imprinting, intrinsic motivation, top management team

JEL Classification: D83, J62, M41, M51

Suggested Citation

Ma, Zhiming and Novoselov, Kirill and Zhou, Kaitang and Zhou, Yi, Managerial Academic Experience, External Monitoring and Financial Reporting Quality (July/August 2019). Journal of Business Finance & Accounting, Vol. 46, Issue 7-8, pp. 843-878, 2019, Available at SSRN: https://ssrn.com/abstract=3604486 or http://dx.doi.org/10.1111/jbfa.12398

Zhiming Ma (Contact Author)

Peking University ( email )

Department of Accounting
Guanghua School of Management
Beijing, 100871
China

Kirill Novoselov

Shanghai University of Finance and Economics

Kaitang Zhou

School of Economics and Management, Wuhan University ( email )

Wuhan, 430072
China

Yi Zhou

Fudan University

Beijing West District Baiyun Load 10th
Shanghai, 100045
China

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