The Impact of CEO Turnover on Earnings Management

In recent years, with the development of China’s economy and changes in the political environment, the phenomenon of the departure of CEOs of Chinese listed companies has frequently occurred. In addition, the basis of Chinese managers’ performance evaluation is the company’s performance, and earnings management is an important factor affecting the company’s performance. When the CEO changes, it has become more prominent, which has caused great concern of investors, creditors, securities regulatory authorities and other stakeholders in the development of China’s securities market. Strengthening research on earnings management is very important for improving the securities market and optimizing the allocation of resources. CEO turnover will bring strong significant earnings management, and CEO turnover is inevitable for any company in its development process. So, this paper studied the relationship between CEO turnover and earnings management. Specifically, this paper draws the following conclusions: Listed companies had significant downward accrual earnings management in the year of CEO turnover; Listed companies had significant upward accrual earnings management in the first two fiscal years of CEO’s tenure; Listed companies had significant upward accrual earnings management in the last two fiscal years of CEO’s tenure; Listed companies didn’t have significant real earnings management in the year of CEO turnover; Listed companies had significant upward real earnings management in the first two fiscal years of CEO’s tenure; Listed companies had significant upward real earnings management in the last two fiscal years of CEO’s tenure.