Ceos’ Extensive Term of Office Inhibits Discretionary Accruals Outros Idiomas

PURPOSE - CEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office. Therefore, CEOs, in their early years of office, have incentives to report results that meet market expectations. In turn, CEOs in their senior year may be motivated to use discretionary accruals to gain private benefits. In this scenario, corporate governance mechanisms play an important role in monitoring relationships. Hence, the purpose of this study is to verify the influence of monitoring mechanisms on the relationship between CEOs’ term of office and discretionary accruals. DESIGN/METHODOLOGY/APPROACH - Descriptive statistics, multiple cross-sectional regression to estimate the accruals and regression of panel data to test the hypotheses were used. The sample comprised 195 companies listed on BM&FBovespa. FINDINGS - The results indicated that CEOs’ long term of office has a negative impact on the level of discretionary accruals, and thus, Brazilian CEOs with a longer term of office tend to establish a certain reputation in the stock market. On the other hand, it is concluded that CEOs’ intentions, in the first years of term, are positively related to the use of accruals and that the monitoring mechanisms can minimize these CEOs’ opportunistic practices. ORIGINALITY/VALUE - The results broaden the literature on corporate governance, pointing that different systems of variable remuneration may influence CEOs’ willingness to manage results in their last year of term.
Citação ABNT:
MAGRO, C. B. D.; KLANN, R. C.; MONDINI, V. E. D. Ceos’ Extensive Term of Office Inhibits Discretionary Accruals. Revista de Administração, v. 53, n. 4, p. 575-596, 2018.
Citação APA:
Magro, C. B. D., Klann, R. C., & Mondini, V. E. D. (2018). Ceos’ Extensive Term of Office Inhibits Discretionary Accruals. Revista de Administração, 53(4), 575-596.
Link Permanente:
Tipo de documento:
Ali, A.; Zhang, W. (2015). CEO tenure and earnings management. Journal of Accounting and Economics, v. 59, n. 1, pp. 60-79.

Almeida, J. E. F.; Almeida, J. C. G. (2009). Auditoria e earnings management: estudo empírico nas empresas abertas auditadas pelas big four e demais firmas de auditoria”, Revista Contabilidade andFinanças, v. 20, n. 50, pp. 62-74.

Bratton, W. W.; McCahery, J. A. (1999). Comparative corporate governance and the theory of the firm: the case against global cross reference. Columbia Journal of Transnational Law, v. 38, n. 2, p. 213.

Brickley, J. A.; Linck, J. S.; Coles, J. L. (1999). What happens to CEOs after they retire? New evidence on career concerns, horizon problems, and CEO incentives. Journal of Financial Economics, v. 52, n. 3, pp. 341-377.

Bushee, B. J. (1998). The influence of institutional investors on myopic R&D investment behaviour. The AccountingReview, v. 73, n. 3, pp. 305-333.

Cella, C.; Ellul, A.; Gupta, N. (2014). Learning through a smokescreen: earnings management and CEO compensation vertenure. availableat:SSRN2544262

Collins, D. W., Gong, G.; Hribar, P. (2003). Investor sophistication and the mispricing of accruals. Review of Accounting Studies, v. 8, n. 2/3, pp. 251-276.

Cornett, M. M.; Marcus, A. J.; Tehranian, H. (2008). Corporate governance and pay-for-performance: the impact of earnings management. Journal of Financial Economics, v. 87, n. 2, pp. 357-373.

De Angelo, L. E. (1988). Managerial competition, information costs, and corporate governance: the use of accounting performance measures in proxy contests. Journal of Accounting and Economics, v. 10, n. 1, pp.3-36.

Dechow, P. M.; Dichev, I. D. (2002). The quality of accruals and earnings: the role of accrual estimation errors. The Accounting Review, v. 77, n. S1, pp. 35-59.

Dechow, P. M.; Hutton, A. P.; Kim, J. H. Sloan, R. G. (2012). Detecting earnings management: a new approach. Journal of Accounting Research, v. 50, n. 2, pp. 275-334.

Dechow, P. M.; Skinner, D. J. (2000). Earnings management: reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons, v. 14, n. 2, pp. 235-250.

Dechow, P. M.; Sloan, R. G. (1991). Executive incentives and the horizon problem: an empirical investigation. Journal of Accounting and Economics, v. 14, n. 1, pp. 51-89.

Dechow, P. M.; Sloan, R. G. Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, v. 70, pp. 193-225.

Diamond, D. W. (1989). Reputation acquisition in debt markets. The Journal of Political Economy, v. 97, n. 4, pp. 828-862.

Ebrahim, A. (2007). Earnings management and board activity: an additional evidence. Review of Accounting and Finance, v. 6, n. 1, pp. 42-58.

Fudenberg, D. Tirole, J. (1995). A theory of income and dividend smoothing based on incumbency rents. Journal of Political Economy, v. 103, n. 1, pp. 75-93.

Furuta, F. Santos, A. D. (2010). Comitê de auditoria versus conselho fiscal adaptado: a visão dos analistas de mercado e dos executivos das empresas que possuem ADRs. Revista Contabilidade and Finanças, v. 21, n. 53, pp. 1-23.

Goulart, A. M. C. (2007). Gerenciamento de resultados contábeis em instituições financeiras no Brasil. 211 fls. (Tese Doutorado em Ciências Contábeis). Universidade de São Paulo, São Paulo/SP, Brazil.

Graham, J. R.; Harvey, C. R. Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, v. 40 Nos 1/3, pp. 3-73.

Healy, P. M. Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, v. 13, n. 4, pp. 365-383.

Hermalin, B. E. Weisbach, M. S. (1998). Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review, v. 88, n. 1, pp. 96-118.

Hermalin, B. E. Weisbach, M. S. (2012). Information disclosure and corporate governance. The Journal of Finance, v. 67, n. 1, pp. 195-233.

Holmstrom, B. (1982). Moral hazard in teams. The Bell Journal of Economics, v. 13, n. 2, pp. 324-340.

Huson, M. R.; Tian, Y.; Wiedman, C. I. Wier, H. A. (2012). Compensation committees’ treatment of earnings components in CEOs’ terminal years. The Accounting Review, v. 87, n. 1, pp. 231-259.

Kalyta, P. (2009). Accounting discretion, horizon problem, and CEO retirement benefits. The Accounting Review, v. 84, n. 5, pp. 1553-1573.

Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, v. 33, n. 3, pp. 375-400. ,

Kuang, Y. F.; Qin, B. Wielhouwer, J. L. (2014). CEO origin and accrual-based earnings management. Accounting Horizons, v. 28, n. 3, pp. 605-626.

Lam, S. S. Chang, S. L. (1994). Auditor service quality and auditor size: evidence from initial public offerings in Singapore. Journal of International Accounting, Auditing and Taxation, v. 3, n. 1, pp. 103-114.

Lopes, A. B. Martins, E. (2005), Teoria da Contabilidade: Uma Nova Abordagem, Atlas, Clifton Hill.

Martinez, A. L. (2001). Gerenciamento dos resultados contábeis: Estudo empírico das companhias abertas Brasileiras. 167 fls. (Tese doutorado em contabilidade). Universidade de São Paulo, São Paulo/SP, Brazil.

Milbourn, T. T. (2003). CEO reputation and stock-based compensation. Journal of Financial Economics, v. 68, n. 2, pp. 233-262.

Murphy, K. J. Zimmerman, J. L. (1993). Financial performance surrounding CEO turnover. Journal of Accounting and Economics, v. 16 Nos 1/3, pp. 273-315.

Pinheiro, J. L. (2001), Mercado de Capitais: Fundamentos E Técnicas, Atlas, Clifton Hill.

Pourciau, S. (1993). Earnings management and nonroutine executive changes. Journal of Accounting and Economics, v. 16 Nos 1/3, pp. 317-336.

Shleifer, A. Vishny, R. W. (1997). A survey of corporate governance. The Journal of Finance, v. 52, n. 2, pp. 737-783.

Stigler, G. J. (1961). The economics of information. The Journal of Political Economy, v. 69, n. 3, pp. 213-225.

Strategy& (2014). Empresas no país estão entre as que mais trocam de CEOs. Disponível, available at:

Thompson, T. A. Davis, G. F. (1997). The politics of corporate control and the future of shareholder activism in the United States. Corporate Governance: An International Review, v. 5, n. 3, pp. 152-159.

Watts, R. L. Zimmerman, J. L. (1986), Positive Accounting Theory, Prentice-Hall, NJ.

Wooldridge, J. M. (2006), Introdução à Econometria: Uma Abordagem Moderna, Pioneira Thomson Learning.

Xie, B.; Davidson, W. N. DaDalt, P. J. (2003). Earnings management and corporate governance: the role of the board and the audit committee. Journal of Corporate Finance, v. 9, n. 3, pp. 295-316.