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:
CreatorsEmailORCIDORCID Put Code
Nieken, PetraUNSPECIFIEDorcid.org/0000-0001-6157-6749UNSPECIFIED
Sliwka, DirkUNSPECIFIEDorcid.org/0000-0002-8026-0165UNSPECIFIED
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: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
INCENTIVE CONTRACTS; CAREER CONCERNS; ECONOMICS; TURNOVER; HORIZON; INCOMEMultiple languages
Economics; ManagementMultiple languages
URI: http://kups.ub.uni-koeln.de/id/eprint/39597

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