Frontiers in Management Research

Download PDF (879.5 KB) PP. 37 - 55 Pub. Date: April 13, 2018

DOI: 10.22606/fmr.2018.22001

• Zhao Tianyue^*
  Department of Finance, Jinan University, Guangzhou, China 510632

There is mounting evidence of the influence of personal characteristics of chief executive officers (CEOs) on corporate governance. This paper analyzed the relation between Chinese Cultural Revolution experience of CEOs (Cultural Revolution CEOs) and corporate earnings management. The research work shows that Chinese Cultural Revolution experience is associated with conservative earnings management behavior taking allowance for corporate ownership structure. Cultural Revolution CEOs pursue less corporate earnings management, especially in terms of negative earnings management, and perform better if their decision-making power is bigger. When real tax rate rises, Cultural Revolution CEOs prevent companies from undertaking aggressive tax-avoiding earnings management and behave more effective if corporate earnings management is severer. The study also shows that CEOs living closer to Chinese politic center in the youth perform better in reducing corporate earnings management. Taken together, the results show that Chinese Cultural Revolution experience of CEOs has significant explanatory power for earnings management decisions.

Earnings management; Chinese Cultural Revolution; CEO

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