Abstract
We study whether the mandatory adoption of International Financial Reporting Standards (IFRS) is associated with changes in the sensitivity of CEO turnover to accounting earnings and how the impact of IFRS adoption varies with country-level institutions and firm-level incentives. We find that post-adoption, CEO turnover responds more to a firm’s accounting performance. This increase in turnover-to-earnings sensitivity is concentrated in countries with stronger enforcement of financial reporting and is more prominent for mandatory adopters that have strong firm-level compliance incentives. In addition, we link the change in turnover-to-earnings sensitivity directly to accounting changes due to IFRS adoption and find a stronger IFRS adoption effect when firms report large overall accounting changes and large de-recognition of loss provisions upon IFRS adoption.
Published Version
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