دانلود رایگان مقاله انگلیسی مدیران ارشد مالی و مدیریت درآمد پیرامون فروش اولیه سهام - الزویر 2018

ABSTRACT

This study examines the association between financial expert CEOs and earnings management (EM) around initial public offerings. We identify financial expert CEOs as those having past experience in either banking or investment firms, large auditing firms, or finance-related roles. We find strong evidence that newly listed firms with financial expert CEOs are less likely to engage in either accrual-based or real EM in the offering year than those with non-financial expert CEOs. In particular, our results are robust after controlling for the potential selection issue that occurs due to non-random matching of CEOs to firms. In addition, we employ alternative measures of financial expertise, including past experience in a CFO position, financial experience variety, and professional qualifications. We document that CEOs who used to work as CFOs and those who gained varied financial experience are less likely to manage earnings through both accruals and real activities. Moreover, CEOs who have a professional qualification in finance and/or accounting are also associated with lower accrual-based EM.

6. Conclusions

This paper provides novel empirical evidence for the association between financial expert CEOs and EM around IPOs. Financial experience provides CEOs with profound insights into financial and accounting issues, which allows them to make sound accounting decisions. Financial background also helps CEOs to work more effectively with CFOs to enhance the financial reporting process. Moreover, past experience in the financial market makes financial expert CEOs highly aware of the importance of accounting information in allowing investors to derive a firm's value. Reputational concerns also restrain financial expert CEOs from financial reporting misbehavior. Therefore, financial expert CEOs are more incentivized to provide higher quality financial reporting to the market.

In our analysis, we identify financial expert CEOs as those having past experience in banking or investment firms, large auditing firms, or finance-related roles. Our main findings indicate that IPO firms with a financial expert CEO are less likely to engage in accrual-based and real EM in the offering year. In particular, the impact of financial expert CEOs on accrual-basedEM is more pronounced when the CEO has greater decision-making power. Our findings remain consistent after controlling for the potential endogenous CEO–firm matching. Moreover, we check the robustness of our results with different measures of financial expertise, including prior experience as a CFO, financial experience variety, and professional qualifications in finance and/or accounting. We continue to find that CEOs who used to work as a CFO and those who gained financial experience in various firms, financial roles, and for a longer period of time are less likely to manage earnings through accruals and real activities. Having a CEO with a professional qualification is negatively associated with lower accrual-basedEM in the offering year. The overall evidence suggests the significance of financial expert CEOs in reducing EM by IPO firms in the issue year.