Staggered Boards and Earnings Management

• 成果类型: Article
• 署名作者: Zhao, Yijiang; Chen, Kung H.
• 署名单位: University of Alaska System; University of Alaska Fairbanks; University of Nebraska System; University of Nebraska Lincoln
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2008.83.5.1347
• 发表日期: 2008
• 页码: 1347-1381
• 关键词: CORPORATE GOVERNANCE; MANAGERIAL OWNERSHIP; equity incentives; market valuation; firm; COSTS; Informativeness; COMMITTEE; FRAUD; LAW

摘要

The literature suggests that staggered boards may have two opposite effects on earnings management: the expropriation view emphasizes the exacerbating effect, whereas the quiet life view advocates the mitigating effect. We use two approaches to examine this issue: a small-sample test based on whether firms are accused of committing financial reporting fraud, and a large-sample test based on the absolute value of unexpected accruals. We find that staggered boards are associated with lower likelihoods of committing fraud and smaller magnitudes of absolute unexpected accruals. Consistent with prior studies, we also find that staggered boards are negatively associated with firm value. The results suggest that staggered boards may enable managers to enjoy the quiet life and lessen their motivation to increase firm value; as a consequence, managers are not motivated to manage earnings.