CEO characteristics and earnings management: empirical evidence from France

Abstract

Purpose

The purpose of this paper is to investigate the impact of chief executive officer (CEO) characteristics on the earnings management examined by the discretionary accruals.

Design/methodology/approach

The sample includes 151 French firms listed on the CAC ALL shares index from 2006 to 2015. The paper uses the feasible generalized least square regression technique to test the relationship between CEO characteristics and earnings management.

Findings

Using discretionary accruals as a proxy for earnings management, the results obtained from the three models (Jones modified 1995; Kothari et al., 2005; Raman and Shahrur, 2008) indicated that there is a positive and significant relationship between CEO duality, CEO nationality and the quality of financial communication. However, no significant relationship was found between CEO board member, CEO turnover and earnings management.

Originality/value

A literature review finds that fewer studies have investigated the relationship between earnings management practices and personal CEO characteristics in the French context. Furthermore, no study yet has examined the influence of CEO nationality and CEO age on earnings management practices. This study provides empirical data about the impact of CEO’s characteristics on earnings management and how these different characteristics can facilitate the transition to manipulate and influence the quality of financial communication.

Citation

Bouaziz, D., Salhi, B. and Jarboui, A. (2020), "CEO characteristics and earnings management: empirical evidence from France", Journal of Financial Reporting and Accounting, Vol. 18 No. 1, pp. 77-110. https://doi.org/10.1108/JFRA-01-2019-0008