The effect of CEO ownership on the information content of reported earnings

Ghosh, Aloke; Moon, Doocheol

doi:10.1007/s11156-009-0140-0

Cited by 13 publications

(7 citation statements)

References 37 publications

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“…In Table IV, evidence from the regression result (Model 1) indicates that CEOW is negative and significant (b = À3.466, p = 0.000), suggesting that having more shares by the CEO's increase his ability to improve the reporting quality. This is consistent with Kim and Lu (2011) and Ghosh and Moon (2010), who also find that CEOW improves firm's market valuation. This finding supports our hypothesis that ownership by CEO increases his capacity to constrain the frequency of real earnings manipulations.…”

Section: Regression Resultssupporting

confidence: 89%

CEO discretion, political connection and real earnings management in Nigeria

Sani¹,

Latif

Al‐Dhamari

2020

MRR

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Purpose The purpose of this paper is to examine the influence of CEO discretion on the real earnings management and to explore whether the discretion of the CEO to ensure accurate and reliable financial reports is influenced by the political connection of board members. Design/methodology/approach Using the generalized method of movement to control the potential endogeneity on the sample of listed companies in Nigeria, the study conducted several checks using Driscoll–Kraay panel data regression with standard error to robust the main findings. Findings The paper provides evidence that CEO Discretion reduces the tendency of real earnings management and improve the reporting quality. However, the CEO’s discretion to provide reliable financial reports and to reduce the likely earnings manipulation is overturn by the presence of politically connected directors. Originality/value Existing studies on CEO attributes and earnings management in Nigeria fail to explain why CEOs were involved in corporate financial scandals. This paper suggests that the presence of politically connected directors is what override and upturn the CEO discretion to dwell into real earnings manipulations. Prior studies measured political connection using a dummy variable (Chaney et al., 2011; Osazuwa et al., 2016; Tee, 2018), this paper measured political connection using the proportion of politically connected directors. This is on the idea that the presence of more politically connected directors may give them the power to override the CEOs decision.

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Section: Regression Resultssupporting

confidence: 89%

CEO discretion, political connection and real earnings management in Nigeria

Sani¹,

Latif

Al‐Dhamari

2020

MRR

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“…According to Gul et al (2013), gender diverse boards provide high quality earnings-related information to the market, which helps to increase forecast accuracy and reduce dispersion. Other managerial characteristics such as stock ownership is also known as an important determinant of forecast properties (Ghosh and Moon, 2010;Han et al, 2014)[2].…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…In this scenario, the median value of earnings forecasts could be more reliable. Hence, as a robustness test, we use median value of earnings forecasts for the measure of forecast accuracy and bias, consistent with prior literature (Cheong and Al Masum, 2010;Ghosh and Moon, 2010;Hovakimian and Saenyasiri, 2014).…”

Section: Median Instead Of Mean Value For Forecast Accuracy and Biasmentioning

confidence: 99%

CEO age and analysts forecast properties

Haider

Sultana

Singh

et al. 2019

ARA

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Purpose The purpose of this paper is to assess whether there is an association between CEO age and analysts forecast properties (particularly forecast accuracy and bias/optimism). CEOs, having the central role in managing firms, can significantly influence the financial and non-financial decisions in an organisation. Furthermore, having been identified as key culprits in past major accounting scandals, it is also important to identify the CEO characteristics that affect financial reporting decisions. Design/methodology/approach This study adopts the upper echelon theory on the relationship between CEO age and analysts forecast properties. The authors use a sample of 2,730 Australian firm-year observations for the period 2004–2013 drawn from IBES, Connect 4 and SIRCA databases. Findings The authors find that analyst forecast accuracy increases and bias (optimism) reduces with the CEO age. The authors conclude that earnings and related information provided to analysts improves with the CEO age, which increases the forecast accuracy and reduces bias (optimism). Additional results suggest that the positive (negative) effect of CEO age on forecast accuracy (bias) remains until the CEOs reach the age of their retirement age (65 years). The results remain consistent with a number of sensitivity tests and provide implication for stakeholders such as firms, analysts, auditors, financial statements users and regulators. Practical implications The authors demonstrate that the relationship between CEO age and analyst forecast properties is not linear but is, in fact, curvilinear substantiating concerns that CEOs that are much younger or much older do not help increase the quality of the information environment. Consequently, firms hiring CEOs in the right age bracket also benefit by having higher-quality information environment leading possibly to reduce costs such as those relating to debt and/or equity ultimately increasing firm value. Originality/value Empirical studies on the association between CEO age and analysts earnings properties in Australia are scarce and this paper contributes to the determinants of the analysts forecast accuracy and bias (optimism) and the CEO age literature.

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“…Gosh and Moon (2010) argue that investors are less expected to rely on CEO ownership to evaluate earnings quality when firms have other sources of information about the CEO. Given that large firms possess better information environments than small firms, the relationship between the board of directors' variables and earnings quality is expected to be weaker in large firms.…”

Section: Additional Analysesmentioning

confidence: 99%