Universität zu Köln

Nieken, Petra ORCID: 0000-0001-6157-6749 and Sliwka, Dirk ORCID: 0000-0002-8026-0165 (2015). Management Changes, Reputation, and Big Bath-Earnings Management. J. Econ. Manage. Strategy, 24 (3). S. 501 - 523. HOBOKEN: WILEY. ISSN 1530-9134

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Abstract

We study the effects of managerial turnover on earnings management activities in a model in which managers care about their external reputation. We develop an overlapping generations model showing that both outgoing and incoming managers bias reported earnings such that typically very low returns are reported in the first period after a manager has been replaced. Outgoing managers shift earnings forward to their last period in office as they will not benefit from earnings realized after that. Incoming managers can have an incentive to shift earnings to the second period in office as reported earnings will, immediately after a management change, only be partly attributed to their own ability. Deferred compensation can reduce incentives for earnings management.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Nieken, Petra UNSPECIFIED orcid.org/0000-0001-6157-6749 UNSPECIFIED Sliwka, Dirk UNSPECIFIED orcid.org/0000-0002-8026-0165 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-395975
DOI:	10.1111/jems.12101
Journal or Publication Title:	J. Econ. Manage. Strategy
Volume:	24
Number:	3
Page Range:	S. 501 - 523
Date:	2015
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1530-9134
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Center of Excellence C-SEB Faculty of Management, Economics and Social Sciences > Business Administration > Corporate Development > Professorship for Business Administration and Human Resources Management
Subjects:	Economics
Uncontrolled Keywords:	Keywords Language INCENTIVE CONTRACTS; CAREER CONCERNS; ECONOMICS; TURNOVER; HORIZON; INCOME Multiple languages Economics; Management Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/39597