경영자 교체와 이익조정 - 신규 상장기업을 중심으로

This study examines whether the CEO turnover affects earnings management in the IPO firms. Existing studies documented that discretionary assets write offs are associated with CEO turnover. It implies that a new CEO has an incentive to report lower earnings by using income decreasing discretionary accruals, because he or she can blame the prior CEO for poor performance during the first year of newly appointed as a CEO. So new CEO can take credits to improve performance in the following years. When the CEOs and related parties of the CEOs hold many shares of the company, it is possible that CEOs can appoint related or internal person as a successor. In this case, it may be difficult for the new CEO to blame the former CEO for the poor firm performance caused by the downward earnings management. However a new CEO easily reports lower earnings by using income decreasing discretionary accruals using his/her discretion. Since IPO firms have high levels of managerial ownership, this paper examine the association between the CEO turnover and earnings management during the IPO period. Using a sample of non financial firms listed on the KOSDAQ and KOSPI over the 2000 2005 period, the results indicate that the CEO change does not cause income-decreasing earnings management before IPO year, but discretionary accruals are decreasing in the CEO change of companies after IPO year. This paper makes following contributions. First, by examining between the CEO turnover and financial reporting, this paper shows the characteristics of going public companies. Second, this paper suggests that the CEO change can result earnings management in the post IPO year. This paper has following limitations. To analyze the characteristics of going public companies we should examine CEO changes of private companies. Since CEO characteristics may affect earnings management we should consider CEO characteristics such as tenure, CEO ability and CEO compensation.