Abstract
This study attempts to add to the small body of existing literature relating the CEO characteristics to earnings management. Our research is carried out on 153 French listed companies over the year 2008. Using discretionary accruals as proxy for earnings management, we find a significant positive relationship between CEO characteristics and earnings management, suggesting that as reputed CEO is well compensated, he is more afraid to lose his compensation level, therefore his incentive to manipulate firm’s earnings increases. Findings also indicate that the dual CEO-chairman relationship advances CEO to manage earnings, particularly when the CEO-chairman holds the major proportion of equity ownership in the firm. This finding suggests that CEO-chair accumulates his managerial power and lack of control to extract private yields. Finally, results come up with new evidence on the relation between CEO expertise and earnings management. It shows that expertise affects positively CEO’s behavior to use agressive earnings management.
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