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CEO accounting-based attributes and earnings management strategies under IFRS adoption

Author

Listed:
  • Amel Kouaib

    (FSEG Sfax - Faculté des Sciences Economiques et de Gestion de Sfax - Université de Sfax - University of Sfax)

  • Anis Jarboui

    (ISAAS - Institut supérieur d'administration des affaires de Sfax - Université de Sfax - University of Sfax)

  • Khaireddine Mouakhar

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

Abstract

The purpose of this paper is to focus on the moderating effect of mandatory International Financial Reporting Standards (IFRS) adoption on the relationship between chief executive officer (CEO) experience/education and earnings management in European companies. Data from a sample of 302 European firms listed on Stoxx Europe 600 index and 596 CEOs from 2000 to 2014 are used to test the moderation model using moderation regression analysis. Evidence reveals that CEO's accounting-based attributes are negatively associated with accruals-based earnings management and positively associated with real earnings management (REM). Further, mandatory IFRS adoption significantly moderates the impact of CEO's accounting-based traits on earnings-management activities. A small number of European firms were studied and, given the long study period, many firms with missing data were eliminated. To avoid a small sample size, countries with few observations were included, which leads to an uneven distribution between observations per country. Findings from this paper can help: European firms to consider demographic traits when recruiting or promoting executives; the IASB to improve enforcement mechanisms and make IFRS implementation mandatory; and audit committees to effectively monitor REM. This study is unique in providing European evidence for the moderating effect of mandatory IFRS adoption on the relationship between CEOs' accounting experience/education and earnings management activities. This paper is also relevant as it addresses the effectiveness and efficiency of accounting literates.

Suggested Citation

  • Amel Kouaib & Anis Jarboui & Khaireddine Mouakhar, 2018. "CEO accounting-based attributes and earnings management strategies under IFRS adoption," Post-Print hal-02065922, HAL.
    • Handle: RePEc:hal:journl:hal-02065922
    DOI: 10.1108/jaar-04-2017-0051
    as

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