Logo image
Back
CEO Retirement, Corporate Governance and Conditional Accounting Conservatism
Journal article   Peer reviewed

CEO Retirement, Corporate Governance and Conditional Accounting Conservatism

S. Chen, S.X. Ni and F.F. Zhang
European Accounting Review, Vol.27(3)
2017
DOI: https://doi.org/10.1080/09638180.2017.1279065
url
Link to Published Version *Subscription may be requiredView

Abstract

Based on 16,604 observations between 1994 and 2006, this study revisits the ‘horizon problem’ by examining how CEO retirement affects conditional accounting conservatism. We hypothesize and find that firms become less conservative in their financial reporting before the retirement of their CEOs, and that strong corporate governance mitigates the effect of CEO retirement. The literature concerning the horizon problem has suggested that CEOs manipulate earnings to boost short-term performance before they leave their companies (Dechow, P. M., & Sloan, R. G. (1991). Executive incentives and the horizon problem: An empirical investigation. Journal of Accounting and Economics, 14(1), 51–89; Smith, C. W., & Watts, R. L. (1982). Incentive and tax effects of executive compensation plans. Australian Journal of Management, 7(2), 139–157), but the evidence is mixed. By examining conditional conservatism, we avoid some of the methodological difficulties that confront researchers when examining either real or accrual earnings management. Ours is the first study to provide evidence on how the horizon problem shapes conditional accounting conservatism.

Details

Metrics

63 Record Views
22 Times Cited - Web of Science

InCites Highlights

These are selected metrics from InCites Benchmarking & Analytics tool, related to this output

Collaboration types
Domestic collaboration
International collaboration
Citation topics
6 Social Sciences
6.10 Economics
6.10.63 Corporate Governance
Web Of Science research areas
Business, Finance
ESI research areas
Economics & Business
Logo image