CEO Characteristics and Real Earnings Management in Jordan

Abstract

<jats:p>The Chief Executive Officer (CEOs) tends to be the most influential member of a corporation as they exert control over corporate decisions such as financial disclosure, board structure, and company performance in ensuring enhanced corporate performance and earnings. The issue of earnings management (EM) that has captured the attention of researchers may be among the most critical factors that are linked to financial statement manipulation. Therefore, the current study explored the effects of the personal characteristics of CEOs on real earnings management (REM) practices in Jordan. Data of 58 companies listed on the Amman Stock Exchange for six years from 2013 to 2018 were utilised to achieve this study’s objectives. The results of this study revealed that CEOs’ experience had a significantly positive association with REM. Meanwhile, CEOs’ tenure had no impact on REM among Jordanian firms. Also, the results exposed the presence of a significantly negative association between CEO duality and REM. Finally, CEOs’ political connection was found to have a significantly positive association with REM. This study offers empirical evidence on the effect of CEO characteristics on REM and how such characteristics can lead to exploitation, which brings an impact on the financial reporting quality.</jats:p>

Managerial ability and real earnings management in family firms

“…This research also contributes to fil the findings gap of managerial ability and REM. As ability attributes of managerial can both increase (Alhmood et al, 2020;Li et al, 2016;Qi et al, 2018) and decrease (Huang and Sun, 2017) REM activities, this research follows the suggestion by Huang and Sun (2017) by considering the firms' characteristics to determine higher ability managers' behavior which is the family role in the firms.…”

“…Previous studies find the positive effect of managerial ability-related attributes, such as experience, expertise and education, on REM (Alhmood et al, 2020;Li et al, 2016;Qi et al, 2018). On the other hand, Huang and Sun (2017) find that higher ability managers have less REM.…”

“…As one of the managerial characteristics, the managerial ability is essential to be examined if it relates to REM activities. On the one hand, higher managers' expertise and knowledge allow managers to engage easier in the REM (Alhmood et al, 2020;Li et al, 2016;Qi et al, 2018). On the other hand, managers can use their higher ability to optimize normal business activities without engaging in any REM activities (Huang and Sun, 2017).…”

Pengaruh Karakteristik Perusahaan, Kinerja Perusahaan, Dan Management Entrenchment Terhadap Manajemen Laba

“…Hubungan tersebut menunjukan bahwa ketika perusahaan mengalami pertumbuhan bisa saja diakibatkan oleh pemilihan akuntasi oleh manajemen dalam melaporkan nilai keuntungan perusahaan. Alhmood, Shaari, & Al-dhamari (2020) menemukan hubungan negatif dari kedua variabel dimana perusahaan yang memiliki peluang pertumbuhan rendah maka manajemen cenderung akan mengambil keputusan atas perlakuan manipulasi agar angka yang dilaporkan menunjukan perusahaan memiliki kinerja ekonomi yang sehat. Ada pula penelitian yang menemukan bahwa peluang pertumbuhan justru mempengaruhi secara signifikan positif terhadap manajemen laba sehingga ketika peluang pertumbuhan perusahaan tinggi dapat disebabkan oleh adanya perlakuan manajemen laba (Debnath, 2017;Trung et al, 2020).…”

“…Hal tersebut didukung dengan penelitian Fagbemi et al (2020) dan Qawasmeh & Azzam (2020) yang menemukan pengaruh signfikan positif dari masa jabatan direktur utama terhadap manajemen laba. Namun Alhmood et al (2020) dan Park (2016) menemukan bahwa masa jabatan seorang direktur utama tidak dapat mempengaruhi potensi terjadinya manajemen laba baik direktur utama tersebut telah lama menjabat ataupun baru menjabat. H13: Masa jabatan direktur utama berpengaruh signifikan positif terhadap manajemen laba.…”