TY - JOUR
T1 - Top management team expertise and corporate real earnings management activities
AU - Li, Chihua
AU - Tseng, Yijie
AU - Chen, Tsung-Kang
N1 - Publisher Copyright:
© 2016 Elsevier Ltd
PY - 2016/9/1
Y1 - 2016/9/1
N2 - This study investigates the effects of top management team (TMT) expertise on real earnings management (REM) activities by examining a hand-collected data set that contains 4,690 firm-year observations from Taiwanese listed firms during 2006 to 2010. The results of this study show that the percentages of TMT members possessing master's degrees (PMS) and managing core functional areas (CORE) negatively relate to REM activities, whereas the percentage of TMT members possessing a CPA certificate (PCPA) has the opposite effect. We also find that the PMS and CORE effects are mainly demonstrated through the channel of raising firm performance and thereby reduce managers' incentives to manage earnings. In addition, the effect of TMT expertise on REM activities becomes weaker with increasing firm age. Finally, the outcomes of several robustness tests, such as suspect firm analyses, endogeneity analyses, employing other TMT expertise variables, and additionally controlling for accrual-based earnings management also support our results.
AB - This study investigates the effects of top management team (TMT) expertise on real earnings management (REM) activities by examining a hand-collected data set that contains 4,690 firm-year observations from Taiwanese listed firms during 2006 to 2010. The results of this study show that the percentages of TMT members possessing master's degrees (PMS) and managing core functional areas (CORE) negatively relate to REM activities, whereas the percentage of TMT members possessing a CPA certificate (PCPA) has the opposite effect. We also find that the PMS and CORE effects are mainly demonstrated through the channel of raising firm performance and thereby reduce managers' incentives to manage earnings. In addition, the effect of TMT expertise on REM activities becomes weaker with increasing firm age. Finally, the outcomes of several robustness tests, such as suspect firm analyses, endogeneity analyses, employing other TMT expertise variables, and additionally controlling for accrual-based earnings management also support our results.
KW - Management team characteristics
KW - Real earnings management
KW - Top management team expertise
UR - http://www.scopus.com/inward/record.url?scp=84989889440&partnerID=8YFLogxK
U2 - 10.1016/j.adiac.2016.07.007
DO - 10.1016/j.adiac.2016.07.007
M3 - Article
AN - SCOPUS:84989889440
SN - 0882-6110
VL - 34
SP - 117
EP - 132
JO - Advances in Accounting
JF - Advances in Accounting
ER -