CEO Profile and Earnings Quality

TY - JOUR

T1 - CEO Profile and Earnings Quality

AU - Nguyen, Tri Tri

AU - Chau Duong

AU - Narendran, Sunitha

PY - 2020/8/11

Y1 - 2020/8/11

N2 - This paper introduces the PSCORE, which aggregates nine personal characteristics of chief executive ofcers (CEOs), to signal the quality of earnings. The PSCORE is a composite score based on publicly available data on CEOs. The study reports strong positive relationships between the PSCORE and two diferent proxies for earnings quality, (1) discretionary accruals and (2) fnancial statement errors, measured by deviations of the frst digits of fgures reported in fnancial statements from those expected by Benford’s Law. Furtheranalyses indicate that the relationships between the PSCORE and the proxies for earnings quality become more pronounced when CEOs have high equity-based compensation incentives. The findings have some implications for practitioners.© 2020, Springer Science+Business Media, LLC, part of Springer Nature 2020. The attached document (embargoed until 11/08/2021) is an author produced version of a paper published in REVIEW OF QUANTITATIVE FINANCE AND ACCOUNTING uploaded in accordance with the publisher’s self-archiving policy. The final published version (version of record) is available online at the link. Some minor differences between this version and the final published version may remain. We suggest you refer to the final published version should you wish to cite from it.

AB - This paper introduces the PSCORE, which aggregates nine personal characteristics of chief executive ofcers (CEOs), to signal the quality of earnings. The PSCORE is a composite score based on publicly available data on CEOs. The study reports strong positive relationships between the PSCORE and two diferent proxies for earnings quality, (1) discretionary accruals and (2) fnancial statement errors, measured by deviations of the frst digits of fgures reported in fnancial statements from those expected by Benford’s Law. Furtheranalyses indicate that the relationships between the PSCORE and the proxies for earnings quality become more pronounced when CEOs have high equity-based compensation incentives. The findings have some implications for practitioners.© 2020, Springer Science+Business Media, LLC, part of Springer Nature 2020. The attached document (embargoed until 11/08/2021) is an author produced version of a paper published in REVIEW OF QUANTITATIVE FINANCE AND ACCOUNTING uploaded in accordance with the publisher’s self-archiving policy. The final published version (version of record) is available online at the link. Some minor differences between this version and the final published version may remain. We suggest you refer to the final published version should you wish to cite from it.

KW - Earnings quality

KW - Benford’s law

KW - Chief executive officers

U2 - 10.1007/s11156-020-00916-7

DO - 10.1007/s11156-020-00916-7

M3 - Article

SP - 1

EP - 39

JO - Review of Quantitative Finance and Accounting

JF - Review of Quantitative Finance and Accounting

ER -