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The influence of executive age, career horizon and incentives on pre-turnover earnings management

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  • Wallace Davidson
  • Biao Xie
  • Weihong Xu
  • Yixi Ning

Abstract

In this paper we hypothesize that CEOs will be motivated to manage earnings prior to a turnover decision. This motivation comes from the horizon problem for CEOs nearing retirement age and for CEOs whose profit-based bonus is a large portion of their total compensation. We find that firms in which CEOs are nearing retirement age have large discretionary accruals in the year prior to turnover. Although we find firms with a larger proportion of profit-based bonus pay have larger discretionary accruals, this result is not robust with the inclusion of control variables in the regressions. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Wallace Davidson & Biao Xie & Weihong Xu & Yixi Ning, 2007. "The influence of executive age, career horizon and incentives on pre-turnover earnings management," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 11(1), pages 45-60, March.
    • Handle: RePEc:kap:jmgtgv:v:11:y:2007:i:1:p:45-60
    DOI: 10.1007/s10997-007-9015-8
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    References listed on IDEAS

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