Does Teacher-Turned Businessmen Curb Accrual-Based Earning Management and Real Activity Manipulation

ABSTRACT

Using manually collected data in Chinese-listed firms from year 2008 to 2018, this paper studies that how does teacher-turned businessperson curb or improve accrual-based earning management and real activities manipulation. Results show that top management team (TMTs) with academic experience manage earning less through accruals and manipulating real operating activities. Further studies show that when firms with no-big4 auditors or less analysts tracking, TMTs with (out) foreign experience or political connection, the inhibition of academic experience on the earning management is more pronounced.

KEYWORDS:

• Academic experience
• top management team
• accrual-based earning management
• real activity manipulation
• foreign experience

Notes

1. For simplicity, TMT is the abbreviation of top management team below in this paper.

2. Guo Guangchang is the biggest shareholder of Fosun International, which is a famous Hong Kong Stock Exchange listed firm in China. Liu Yonghao is the president of new hope group, which is a famous listed firm in Shenzhen Stock Exchange of China. Ma Yun is the chairman of Alibaba Group, which is a famous listed firm in New York stock exchange of USA.

Additional information

Funding

This work was supported by the Beijing Social Science Fund [19GLC074]; Fundamental Research Funds for the Central Universities [2020MS044].