Will the Incoming CEOs Manage Earnings in Advance?Empirical Evidence Based on CEO Turnovers Prior to the Disclosure Date of the Annual Report
This article takes A-share listed companies from 2010 to 2020 as samples to examine the impact of CEO turnovers that occurred between the balance sheet date and the disclosure date of the previous annual report on the accrual earnings management in the prior period.The empirical results show that companies that underwent CEO turnovers before the disclosure date of the previ-ous annual report carried out more negative accrual earnings management.Heterogeneity tests find that high-quality internal control and external audit have significant inhibiting effects on the negative accrual earnings management.What's more,external successors do more negative accrual earnings management in the previous annual report than internal successors.Further research shows that the longer the time interval between CEO turnover and previous annual report disclosure,the greater negative accrual earnings management degree.What's more,in the subsample of CEO turn-overs,companies that have more negative accrual earnings management in the previous annual re-port are more likely to realize earnings growth than other companies.This article not only helps to improve the capital market's cognition of earnings management behavior in the previous period of CEO turnovers,but also can provide theoretical reference and practical evidence for improving the quality of accounting information.
Top Managment TurnoverEarnings ManagementInternal ControlExternal Audit
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