The Effect of Changes in Corporate Governance on the Relationship between CEO Turnover and Earnings Management

2023 Fiscal Year Final Research Report

• Project/Area Number: 20K02009
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Review Section: Basic Section 07100:Accounting-related
• Research Institution: Kobe University
• Principal Investigator: Enomoto Masahiro 神戸大学, 経済経営研究所, 教授 (70313921)
• Project Period (FY): 2020-04-01 – 2024-03-31
• Keywords: 経営者交代 / 利益マネジメント / コーポレート・ガバナンス / 会計情報

Outline of Final Research Achievements

This study investigates CEO turnover and earnings management. Using a sample of Japanese firms excluding those in the financial sector, I find that income-decreasing earnings management occurs prior to CEO turnover. After the turnover, for the entire first three fiscal years, CEOs tend to engage in income-increasing earnings management. Additional analyses suggest that corporate governance, specifically shareholder structure, influences these results. Furthermore, in the context of bank CEO turnover, evidence indicates that incoming CEOs engage in income-increasing earnings management in the second year. This behavior suggests an attempt to create a positive impression of their own competence through earnings management.

Free Research Field

財務会計

Academic Significance and Societal Importance of the Research Achievements

本研究は一般事業会社であれ銀行であれ、経営者は就任後に自身の評価を上げるために、利益増加的な利益マネジメントがあることを示唆する証拠を示したことに学術的意義がある。さらに一般事業会社においては、株主構成がそれらの関係に影響することについてわが国の企業をサンプルで得たことも重要である。