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Financial Expert CEOs and Earnings Management Around Initial Public Offerings

Gounopoulos, Dimitrios and Pham, Hang (2018) 'Financial Expert CEOs and Earnings Management Around Initial Public Offerings.' The International Journal of Accounting, 53 (2). 102 - 117. ISSN 0020-7063

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Abstract

This study examines the association between financial expert CEOs and earnings management (EM) around initial public offerings. We identify financial expert CEOs as those having past experience in either banking or investment firms, large auditing firms, or finance-related roles. We find strong evidence that newly listed firms with financial expert CEOs are less likely to engage in either accrual-based or real EM in the offering year than those with non-financial expert CEOs. In particular, our results are robust after controlling for the potential selection issue that occurs due to non-random matching of CEOs to firms. In addition, we employ alternative measures of financial expertise, including past experience in a CFO position, financial experience variety, and professional qualifications. We document that CEOs who used to work as CFOs and those who gained varied financial experience are less likely to manage earnings through both accruals and real activities. Moreover, CEOs who have a professional qualification in finance and/or accounting are also associated with lower accrual-based EM.

Item Type: Article
Uncontrolled Keywords: IPOs, Financial expertise, CEOs, Earnings management
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
Depositing User: Elements
Date Deposited: 14 Sep 2018 09:31
Last Modified: 14 Sep 2018 09:31
URI: http://repository.essex.ac.uk/id/eprint/22199

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