Upper Echelons Theory, Conservative Chairmen and Informative Earnings Management

46 Pages Posted: 10 Oct 2020

Date Written: August 21, 2020

Abstract

The current study focuses on the conservatism levels of provinces of birth of company chairmen to investigate whether public companies quoted at the Borsa Istanbul between the 2009 and 2017 engage in earnings management with an informative intent. Turkey provides a unique setting to investigate the issue in hand since the common ownership structures of public companies and laws and regulations are not likely to provide corporate executives with a high motivation to manage earnings in an opportunistic manner. The findings demonstrate that the level of chairmen conservatism has a positive effect on income-increasing discretionary current accruals. In addition, company performance in the subsequent years are positively associated with discretionary current accruals. Overall, the findings suggest that companies quoted at the Borsa Istanbul appear to be engaged in earnings management with an informative intent. The findings are robust to various conservatism proxies and model specifications.

Keywords: Chairman Conservatism, Earnings Management, Upper Echelons Theory, Culture, Borsa Istanbul

JEL Classification: G34, M41, Z12, Z13

Suggested Citation

Arioglu, Emrah, Upper Echelons Theory, Conservative Chairmen and Informative Earnings Management (August 21, 2020). Available at SSRN: https://ssrn.com/abstract=3678546 or http://dx.doi.org/10.2139/ssrn.3678546

Emrah Arioglu (Contact Author)

Cukurova University ( email )

Saricam ilcesi
Balcali
Adana, 01330
Turkey

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