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The effect of the CEO’s characteristics on EM: evidence from Jordan

Rateb Mohammmad Alqatamin (Division of Accounting and Finance, University of Central Lancashire, Preston, Lancashire)
Zakaria Ali Aribi (Division of Accounting and Finance, University of Central Lancashire, Preston, UK)
Thankom Arun (Business School University of Essex, Colchester, UK)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Article publication date: 7 August 2017

Abstract

Purpose

This study aims to examine the effect of CEO’s personal characteristics on earnings management (EM) practices.

Design/methodology/approach

The authors use panel data for 201 non-financial companies listed on the Amman Stock Exchange (ASE) for the period 2008-2013. The authors use random effect models to test the hypothesis of this study and extent the analysis to family versus non-family.

Findings

The study finds a positive relation between CEO’s overconfidence and EM practices in Jordan. Moreover, the findings reveal that managers in family companies are more likely to engage in EM practices than non-family companies. The findings shed more light on the intricate relationship between CEO’s characteristics, the decision-making process and financial reporting.

Practical implications

Results of this study could be beneficial for a number of users of financial information such as investors, auditors, regulators, lenders, as well other players in the capital market to make right decisions.

Originality/value

A literature review finds that much less studies have investigated the relationship between EM practices and personal CEO characteristics (gender and overconfidence) in developing countries such as Jordan. Furthermore, no study yet has examined the influence of CEO age on EM practices. The authors extend previous literature by providing empirical evidence about effect of some personal CEO’s characteristics on EM practices.

Keywords

Citation

Alqatamin, R.M., Aribi, Z.A. and Arun, T. (2017), "The effect of the CEO’s characteristics on EM: evidence from Jordan", International Journal of Accounting & Information Management, Vol. 25 No. 3, pp. 356-375. https://doi.org/10.1108/IJAIM-10-2016-0099

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited