Managerial entrenchment and earnings management

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Show simple item record Di Meo, Fabrizio García-Lara, Juan M. Surroca, Jordi 2022-06-29T17:30:12Z 2022-06-29T17:30:12Z 2017-10-01
dc.identifier.bibliographicCitation Di Meo, F., García Lara, J. M., & Surroca, J. A. (2017). Managerial entrenchment and earnings management. Journal of Accounting and Public Policy, 36 (5), pp. 399-414.
dc.identifier.issn 0278-4254
dc.description.abstract Agency theorists have long contended that managerial entrenchment is detrimental for shareholders, because it protects managers from the discipline of corporate governance. However, as a competing hypothesis, we argue that entrenchment can also provide benefits for the firm’s owners: it leads managers to be less myopic in managing earnings to meet short-term financial reporting goals. Our findings are consistent with this prediction as they suggest that, when there are incentives to manipulate firms’ performance, entrenched managers are less prone to engage in earnings management activities that hurt shareholders. Specifically, we focus on firms that just meet or marginally beat earnings benchmarks and document a negative association between managerial entrenchment and both the opportunistic use of accruals and the manipulation of real activities. We also show that earnings management is less detrimental to firm value if the manager is entrenched. Finally, we find that these effects of entrenchment on earnings management are only present for firms domiciled in Delaware.
dc.description.sponsorship We acknowledge financial contribution from the Spanish Ministry of Science and Innovation, grants ECO2016-77579 and ECO2013-48328, Ministry of Economy, Industry and Competitiveness, grant ECO2012-34734, and from the CAM-UC3M, grant CCG10-UC3M/HUM-4760 and H2015/HUM-3417, INNCOMCON-CM
dc.language.iso eng
dc.publisher Elsevier
dc.rights © Elsevier, 2017
dc.rights Atribución-NoComercial-SinDerivadas 3.0 España
dc.subject.other Managerial entrenchment
dc.subject.other Earnings management
dc.title Managerial entrenchment and earnings management
dc.type article
dc.subject.jel G3
dc.subject.jel M4
dc.subject.eciencia Economía
dc.subject.eciencia Empresa
dc.rights.accessRights openAccess
dc.relation.projectID Comunidad de Madrid. CCG10-UC3M/HUM-4760
dc.relation.projectID Gobierno de España. ECO2012-34734
dc.relation.projectID Comunidad de Madrid. S2015/HUM-3417
dc.relation.projectID Gobierno de España. ECO2013-48328-C3-2-P
dc.relation.projectID Gobierno de España. ECO2016-77579-C3-2-P
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 399
dc.identifier.publicationissue 5
dc.identifier.publicationlastpage 414
dc.identifier.publicationtitle JOURNAL OF ACCOUNTING AND PUBLIC POLICY
dc.identifier.publicationvolume 36
dc.identifier.uxxi AR/0000020759
dc.contributor.funder Ministerio de Economía y Competitividad (España)
dc.contributor.funder Universidad Carlos III de Madrid
dc.contributor.funder Comunidad de Madrid
dc.affiliation.dpto UC3M. Departamento de Economía de la Empresa
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