Association between having a CA(SA) as CEO and accruals quality

Abstract

Purpose

The purpose of this paper is to examine whether Chartered Accountants South Africa (CAs(SA)) as Chief Executive Officers (CEOs) have an association with accruals quality.

Design/methodology/approach

The theoretical base of this paper is the link between accounting expertise and accruals quality. The sample consists of 812 observations of Johannesburg Stock Exchange (JSE)-listed firms between 2010 and 2013. The association is tested by regressing the CA(SA) as CEO interest variable and control variables on accruals quality, using three metrics of abnormal accruals.

Findings

The overall results suggest that less accruals management and estimation error is present when the CEO is a CA(SA).

Originality/value

This is the first study to test the association between having a CEO with a professional accounting qualification, such as CA(SA), and accruals quality. The findings will be of interest to shareholders and top executives when evaluating the appointment of a CEO.

Citation

Mey, E. and de Klerk, M. (2015), "Association between having a CA(SA) as CEO and accruals quality", Meditari Accountancy Research, Vol. 23 No. 3, pp. 276-295. https://doi.org/10.1108/MEDAR-09-2014-0056