CEO tenure and aggressive accounting.

摘要

This study investigates the relation between CEO tenure and aggressive financial reporting. I find that, on average, CEOs with long tenures report earnings less aggressively than CEOs with short tenures, both in terms of recognizing economic losses in a timelier manner and reporting lower discretionary accruals. These results are consistent with the notion that at the beginning of their tenures, in order to build reputation of ability, CEOs have incentive to inflate earnings; after the CEOs have established their reputations through their long tenures, they report less aggressively in order to protect their reputations. I also find that long-tenured CEOs report more aggressively in their final year of tenure than in the years leading up to the final year of tenure. These results suggest that just prior to the completion of their tenures, long-tenured CEOs are not as concerned about their reputations because the aggressive reporting may be difficult for investors to detect until the firm's future realizations become known. By then, these CEOs leave their firms.