An Empirical Study On CEO Change And Earnings Management

With the rapid development of China’s capital market, the earnings management behavior of listed companies is one of the important financial management research phenomenon, and that is more and more taken the attention of academia. And as the main body of the listed company’s earnings management executives, frequent replacement of CEO’s also gradually become one of the focuses of people’s study, because of the listed company CEO changes not only is one of the important decisions made corporate governance structure, is also a measure of the effectiveness of corporate governance mechanism and also related the stability and the future development of listed companies, and company’s CEO has played a key role in the process of earnings management. The listed company’s CEO who are as surplus of information sources, in order to achieve a certain purpose (hiding and misleading the external investors, avoiding loss. realizing the profit) will take earnings management behavior, especially when the CEO changes. It has been taken focus attention in the development of China’s securities market investors. Although the scholars CEO earnings management problem in the process of change which are studied, but it is still inadequate, and the domestic research is especially less. So this article from the perspective of a CEO change, studies the influence of which on the accrual and real earnings management.On the basis of the study on the earnings management and the relationship between CEO change and the earnings management literature, this paper divides the CEO change into the CEO change and the CEO irregular change the influence of which on that basing public trade firms. Selecting7155samples of listed companies data in china stock during2008-2012period, this paper adopts event.The result reveal that:1, From the perspective of the CEO change and CEO irregular change, study the influence of which on the accrual and real earnings management.2, We use the combined method and factor analysis to constructed respectively comprehensive real earnings management agent variables. We found that as to the selected sample companies, listed companies are using the accrual and real one, and there is biggish difference use of and the situation of them.3,We put forward and verified that:(1)Before the CEO change one accounting period, sample listed companies use accrued items and real activity to increase profits.(2) The change in the CEO, there is significant using accrued items to scale down profits, but there is no obvious manipulation of the real earnings management behavior.(3) In first, two accounting period after that, the listed company significant add profits by the accrued items and real activity.In addition, at the same time, the chairman of the board of directors also changed, the company more likely use the earnings management.4, Putting forward and verified the CEO irregular change of the company are more likely to exist using the accrued items drop down profit,but there is no obvious real earnings management behavior; in the first, two accounting period after the CEO irregular change, they use the accrued items and real activity to increase profits.