The Top Managers Turnover、the Characters Of The Successor And Earnings Management

The research on how top managers turnover influence earnings management has always been an important content of the field of earnings management. The turnover of top managers who have a significant impact on the companys is one of the important decisions of the corporate governance structure, and with the continuous development and improvement of the corporate governance structure, top managers play the increasing important role on corporate behaviors and results of operations significantly, more importantly, they have the option of the company’s accounting policies and control accounting information of company. In the process of top managers turnover, top managers,lying on the main status in the company’s accounting behaviors, may carry out earnings management because of salary and position contracts. Earnings management problems caused by the top managers turnover are not uncommon with the rapid development of the capital market and the continuous changment of the market environment in China. Therefore, the influence of the company’s earnings management from top managers turnover attract more and more academic attention at home and abroad.At present, the existed literatures have carried out the majority of in-depth research from many aspects on this issue, such as whether exists the phenomenon of earnings management before and after top managers turnover, the influence on earnings management when the successor is from internal or external, the difference about the degree of earnings management between normal turnover and abnormal turnover of top managers. However, the existing research which discuss the relationship of top managers’background characteristics and earnings management is quite scarce. In our real life, the top managers’behaviors of different gender, age, educational background and work experience are significantly different.The behaviors of top managers will be different with themselves different background characteristics, and thus the impact on results of operations and strategic choices of a firm will also be different. Then top managers with different background characteristics may have different influence on the company’s earnings management.So it is necessary to consider the successor’s background characteristics when we study the influence of the successor on earnings management after top managers turnover. Therefore, the paper focuses on studying the background characteristics of the successor how influence earnings management.In this paper, Shanghai and Shenzhen A-share listed companies which occur top managers turnover between2008and2010data as a sample, it firstly researches the macro situation of the overall sample occurring top managers turnover and whether has differences on the degree of earnings management among each sub-sample by simply descriptive statistical analysis and sample differences significant analysis.Then it empirical studies how the background characteristics of succeeding top managers affect the firm’s earnings management based on the top echelon theory.The main content of this paper is divided into five parts.The first part is the introduction.At first,the paper puts forword the research background and its meaning. Secondly, it reviews and summarizes the research of relationship of top managers turnover and earnings management behaviors through comparing earnings management behaviors before and after top managers turnover, the influence of earnings management causing by different reasons of top managers turnover and by different sources of succession managers,and the effection of the background characteristics of succeeding top managers on the firm’s earnings management through gender, age and education.Finally,it tells the structure of the paper, and lists the methods adopted in this paper.The second part is the basical theories related to earnings management.First of all,it simply describes the meaning of earnings management and points out that the article adopts the view of Paul M Healy and James M. Wahlen.Then the motivation of earnings management is analyzed by contractual motives, the motives of the political costs and the capital market motives.At last, it introduces three main types of measurement model of earnings management which are the overall accrued profit model, specific accrued profit model and frequency of earnings distribution model,and focuses on analyzing six representative the overall accrued profit model which are Healy model, DeAngelo model, Jones model, modified Jones model, the forward-looking modified Jones model and Jones model of matchable revenue,and points out the paper adopts the modified Jones model calculating earnings management.This part provides the theory basis for the whole text.The third part is that analysis on the relationship between top managers turnover and earnings management. Shanghai and Shenzhen A-share listed companies which occur top managers turnover between2008and2010data as a sample,it gets some meaningful results that executive turnover is more frequently than the chairman turnover and non-state-owned listed companies are more easily occurring top managers turnover than the state-owned listed companies by making use of statistical analysis of the overall sample, and that the extent of earnings management is significantly different between normal turnover and unnormal turnover in four types of sub-samples which are the chairman turnover, the executive turnover, state-owned listed companies and non-state-owned listed companies by analysis of samples significantly different.The fourth part is that analysis on the relationship between characters of the successor and earnings management. Shanghai and Shenzhen A-share listed companies which occur the chairman turnover between2008and2010data as a sample, it empirical studies how the characters of succeeding top managers affect the firm’s earnings management based on the top echelon theory. The study finds that the sex and age of succeeding chairmen and succeeding executives have not significant correlation with the earnings management; the chairmen’s educational background has significant negative correlation with the positive earnings management, and in positive correlation with the negative earnings management; the executive’s educational background has no significant correlation with the earnings management; the succeeding source and work experiences of succeeding chairmen and succeeding executives have significant positive correlation with the positive earnings management, but have not significant correlation with the negative earnings management. This paper is to suggest that the characters of succeeding top managers be considered when we conduct research on earnings management behavior during managements turnover. This consideration will make us have a deeper understanding about earnings management in firms.The fifth part is the last word.This part summaries the main conclusions,and points out the imitations of this study and the direction of further research.