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Professional Education Background And Earnings Management Of Chairmen And Senior Managers

Author

Listed:
  • Hsiang-Tsai Chiang
  • Shu-Lin Lin
  • Li-Jen He
  • Yi-Ting Sung

Abstract

In this study, we investigated how chairmen of the board (COBs) and senior managers, who have professional education background, implement earnings management based on their professional knowledge. The empirical results showed that, regardless of whether COBs are concurrently holding positions as chief executive officers (CEOs), varying degrees of earnings management were exercised as they applied their professional education background and adopted discretionary accruals (DAs) or manipulating operating cash flows. Because DAs demonstrate self-reverse effect as accounting principles, they should be used cautiously and conservatively to manage earnings. COBs and senior managers are individuals who manage earnings. When COBs have accounting background and concurrently hold CEO positions, they exhibit the highest degree of earnings management. Directors and external investors must pay additional attention when COBs concurrently serve as CEOs, because this enables them to manipulate the financial statements of companies based on their professional knowledge.

Suggested Citation

  • Hsiang-Tsai Chiang & Shu-Lin Lin & Li-Jen He & Yi-Ting Sung, 2016. "Professional Education Background And Earnings Management Of Chairmen And Senior Managers," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 10(2), pages 91-108.
    • Handle: RePEc:ibf:ijbfre:v:10:y:2016:i:2:p:91-108
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    More about this item

    Keywords

    Earnings Management; Discretionary Accrual (DA); Real Earnings Management (REM); Professional Education Background;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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