Chief executive officer characteristics and discretionary accruals in an emerging economy

Altarawneh, Marwan; Shafie, Rohami; Ishak, Rokiah; Ghaleb, Belal Ali Abdulraheem

doi:10.1080/23311975.2021.2024117

Cited by 20 publications

(11 citation statements)

References 99 publications

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“…Previous studies show that CEO characteristics are essential factors in determining company policies and performance. CEO gender has been found to be negatively associated with firm performance (Ahmad et al , 2022), earnings management (Altarawneh et al , 2022), firm value (Razali et al , 2022) and sustainable development reporting (SDR) disclosure (Lim-U-Sanno, 2021). CEO gender has been shown to be positively associated with firm performance (Ahmad et al , 2022), bank performance (Buchdadi et al , 2023), firm cash holdings (Suherman et al , 2021b), financial restatements (Altarawneh et al , 2020) and environmental performance of SMEs (Tran and Pham, 2020).…”

Section: Introductionmentioning

confidence: 99%

CEO characteristics and firm performance: evidence from a Southeast Asian country

Suherman

Mahfirah

Usman

et al. 2023

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Purpose The purpose of this study was to investigate how chief executive officer (CEO) characteristics, including age, education, nationality and particularly gender, influence firm performance in a developing Southeast Asian Country (Indonesia). Design/methodology/approach The study uses balanced firm-level panel data for 203 nonfinancial companies listed on the Indonesia Stock Exchange from 2010 to 2020. Return on assets, return on equity and Tobin’s Q were used to measure firm performance. The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors. Findings The results indicate that female CEOs, education and nationality enhance firm performance, while CEO age can either improve or reduce firm performance. Numerous robustness checks were performed; the results were consistent with those in the main analysis. Research limitations/implications Individual characteristics should be considered when appointing CEOs. Some CEO characteristics enhance firm performance. Female CEOs bring new perspectives, while older CEOs’ longer experience adds a competitive advantage. More educated CEOs have a better ability to deal with challenging intellectual activities, and CEOs from foreign countries better understand international market regulations. However, some characteristics may reduce firm performance, for example, older CEOs are more conservative and unable to adapt to changing business environments. Originality/value This study contributes to corporate governance studies by synthesizing CEO characteristics and investigating their relationship with firm performance. Moreover, it emphasizes that developing countries such as Indonesia have different economic, legal, social and cultural environments than developed countries, especially Western countries.

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Section: Introductionmentioning

confidence: 99%

CEO characteristics and firm performance: evidence from a Southeast Asian country

Suherman

Mahfirah

Usman

et al. 2023

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“…Several studies mentioned that expert CEOs are fundamental for better earnings quality [16,24,83,84]. In their most recent study, Altarawneh, Shafie, Ishak, and Ghaleb [85], found that long-serving CEOs are linked to higher-quality financial reporting. However, other studies suggest that expert CEOs reduce firms' reported earnings quality [17,19,22,23,75,86].…”

Section: Ceo Expert Power and Earnings Qualitymentioning

confidence: 99%

“…Empirical investigations closely associated with our study provide very limited and inconclusive findings about the implication of CEOs with high prestige on earnings quality. A few studies showed evidence that CEOs with greater connections maintain a high quality of accrual earnings [85,92], and these CEOs are associated with minimal fraudulent incidents [93]. However, some other studies demonstrate a positive association between well-connected CEOs and earnings management [88,91,94].…”

Section: Prestigious Ceos and Earnings Qualitymentioning

confidence: 99%

Do powerful CEOs matter for earnings quality? Evidence from Bangladesh

2023

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This study investigates the effects of powerful Chief Executive Officers (CEOs) on earnings quality in a setting where CEOs have strong dominance over other top executives and occasionally attempt to exert their influence over corporate regulatory bodies. Using 10-year longitudinal data for the period from 2010 to 2019 and 1,395 firm-year observations from listed non-financial firms in Bangladesh, we found that CEOs’ political power and CEOs with high structural and expert power have a significant detrimental effect on earnings quality. Ownership and prestige power have an insignificant impact on earnings quality. These powerful CEOs use accrual and real activity manipulation techniques together to manage the earnings. This study uses the system-generalized method of moment estimates for estimation purposes, and the results remain robust when alternative earnings quality proxies are used. Taken together, our results suggest that CEOs’ political duality (i.e., serving simultaneously as a member of parliament and a CEO) should be restricted and that a CEO’s tenure should be limited to a reasonable period. This research adds to the existing body of knowledge by offering empirical support for CEO power dynamics on earnings quality, specifically political and prestige power.

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“…963) followed the Kothari and Jones models to investigate if managers actively manipulate company performance prior to an acquisition; how the degree of manipulation affects the long-term performance; if the management's decision to purchase the asset will negatively affect company organizational performance; if it is possible to identify hubristic management before the decision is implemented; and how hubristic management behaviors impact the long-term market performance of the company. The impact of a CEO's attributes on managing profitability measured by discretionary accruals was proposed by Altarawneh et al (2022). Their results, based on the modified Jones model, showed a strong inverse relationship between discretionary accruals and CEO tenure, network, and gender; resultantly, CEO's with longer tenures at the company, more external directorships, and are female, are more rigorous in improving their strategic decisions and less likely to engage in earnings management.…”

Section: Literature Reviewmentioning

confidence: 99%

Earnings management model for Visegrad Group as an immanent part of creative accounting

Kováčová

Hrosova

Ďurana

et al. 2022

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Research background: Creative accounting practices do not frequently violate the law and are not considered illegal; however, accounting managers may exploit legal ambiguities to portray the company's financial standing in accordance with management preferences. Therefore, the analysis is focused on the detection of earnings management in companies operating in the Visegrad Group, which represents one of the most commonly used techniques for revealing creative accounting. Purpose of the article: The aim of the presented study is to reveal the presence of creative accounting through the detection of earnings management in the countries of the Visegrad Group and, based on the detected results, to propose a regression model of earnings management in the Visegrad Group. Methods: To reveal the use of creative accounting in the Visegrad Group, ten selected models of earnings management were applied during the period 2016?2020 to a set of 8,134 companies. The Mann-Whitney test and multiple linear regression were used to verify the existence of earnings management. These findings served as the basis for the creation of the linear regression model of earnings management in the Visegrad Group. Findings & value-added: The presence of earnings management was best captured by the Hribar and Collins model in companies operating in the Visegrad Group in the period 2016?2020. The findings also confirmed that positive discretionary accruals acquired higher values over the entire period when compared to negative discretionary accruals, confirming that companies in the surveyed group manage their profits primarily by increasing them. Therefore, we created a regression model, that can serve as a unique basis and is capable of revealing the use of earnings management in the Visegrad Group, as until now nothing like this has been implemented in these countries. In conclusion, this study offers insights for academicians and researchers on creative accounting in the selected period. Lastly, the study contributes to the existing theory by conducting new research on the earnings management determinants of the countries studied.

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Chief executive officer characteristics and discretionary accruals in an emerging economy

Cited by 20 publications

References 99 publications

CEO characteristics and firm performance: evidence from a Southeast Asian country

CEO characteristics and firm performance: evidence from a Southeast Asian country

Do powerful CEOs matter for earnings quality? Evidence from Bangladesh

Earnings management model for Visegrad Group as an immanent part of creative accounting

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