SYNOPSIS This study examines the influence of CEO origin on accrual-based earnings management and how these effects evolve over the CEO's tenure in office. Compared with CEOs promoted from within the company, CEOs recruited from outside have a stronger incentive to demonstrate their abilities in the initial years after their appointment; these outside CEOs also may have a lower expectation of surviving the short run. We predict and find that outside CEOs engage in greater income-increasing manipulation in the early years of their tenure. However, the differences in earnings management practices become insignificant after CEOs survive the short run. Our results are robust to a variety of alternative hypotheses and sensitivity checks. The findings thus show that CEO origin is an important factor for explaining financial reporting strategies; they also add to our understanding of CEO origin, managerial horizon problems, and the determinants of aggressive accounting. Data Availability: The data used in this study are publicly available from the sources indicated in the text.

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This study examines a setting in which a tax‐reporting decision is delegated to a firm's tax manager. Using financial accounting measures of tax expense to evaluate the tax manager allows the firm to efficiently attain the level of tax avoidance it prefers, despite the fact that the consequences of the tax‐reporting decision will occur in the future. The study also examines how well two accounting measures of tax aggressiveness — cash taxes paid and the unrecognized tax benefit — distinguish between conservative and aggressive firms.

This study addresses the question of what explains compliance with complex regulations, which are technical, extensive, and often subject to modifications. Based on official (anonymized) data of financial intermediaries in the Netherlands (N = 602), we examined the association between compliance (measured as number of law violations) and the extent to which regulatory complexity is perceived as fair (i.e., the perception that the extensive regulation generates unnecessary difficulties for the firm). We hypothesized that perceiving regulatory complexity as fair would motivate firms to acquire knowledge of the regulation, and that this knowledge in turn would improve their ability to comply. In line with our hypothesis, the results of a series of tests show that knowledge mediates the association between perceived fairness and compliance (95% confidence intervals). These findings indicate that (a) regulatory complexity is not necessarily unfair, (b) the well-established direct association between fairness perceptions and compliance is less straightforward when regulations are highly complex (because it involves a fundamental mediating mechanism), and (c) firms' compliance behavior may respond to not only cost-benefit analyses, but also to fairness perceptions about the law. (PsycINFO Database Record