Welcome to the gray zone: shades of honesty and earnings management
| dc.contributor.author | Lapointe-Antunes, Pascale | |
| dc.contributor.author | Veenstra, Kevin | |
| dc.contributor.author | Brown, Kareen | |
| dc.contributor.author | Li, Heather | |
| dc.contributor.author | Michael Lee-Chin & Family Institute for Strategic Business Studies | |
| dc.date.accessioned | 2020-02-07T21:10:09Z | |
| dc.date.available | 2020-02-07T21:10:09Z | |
| dc.date.issued | 2019 | |
| dc.description | 66 p. ; Includes bibliographical references (pp. 41-52).; Authors "gratefully acknowledge helpful comments from Hamza Warraich, Christine Weidman, conference participants at the CPA Manitoba Accounting Research Conference, the Inaugural Conference on Intelligent Information Retrieval in Accounting and Finance (CUHK, Shenzhen), the 2019 AAA Forensic Accounting Section Conference, the 2019 CAAA annual conference, the 2019 AAA Annual Meeting, the 2019 Conference on the Convergence of Financial and Managerial Accounting Research (CFMA) and seminar participants at McMaster University, the University of Waterloo and Carleton University." They also "acknowledge the financial support from the CPA/Brock Institute for International Issues in Accounting and the Social Sciences and Humanities Research Council (SSHRC)." | en_US |
| dc.description.abstract | We examine the influence of face-based judgments of CFO/CEO honesty on earnings management for the largest publicly traded companies in America. After controlling for incentives and opportunities to manage earnings, CFOs and CEOs perceived to be less honest engage in higher levels of both accruals and real earnings management. The beneficial impact of perceived honesty on earnings quality is most pronounced when both the CFO and the CEO are perceived to be honest. Findings are consistent with our conjecture that both the CFO and CEO independently contribute to a firm’s reporting environment and Kahneman’s (2003) findings that many aspects of person perception can be considered to be “intuitive”. Valuation Insight: Lower perceived honesty based on face-based judgments of CFOs and CEOs is found to be associated with higher levels of accruals and real earnings management. Thus, higher perceived honesty is associated with higher earnings quality which positively affects firm value. | en_US |
| dc.identifier.uri | http://hdl.handle.net/11375/25250 | |
| dc.language.iso | en | en_US |
| dc.relation.ispartofseries | Michael Lee-Chin & Family Institute for Strategic Business Studies Working Paper;2019-05 | |
| dc.subject | Upper echelons theory | en_US |
| dc.subject | Earnings management | en_US |
| dc.subject | Visual cues | en_US |
| dc.title | Welcome to the gray zone: shades of honesty and earnings management | en_US |
| dc.type | Working Paper | en_US |