What question did this study set out to answer?

January 14, 2026BRQ Business Research Quarterly0 citationsOpen Access

Relational Dynamics in Earnings Management: Interplay of Celebrity CEOs, CEO-CFO Similarity, and Analyst Coverage

GLGilsoo Lee JAJonathan D. Arthurs ELEun Kyung Lee

Key Points

The research aims to understand how CEO-CFO demographic similarity and analyst coverage affect earnings management practices.
Analyzed the relationship between CEO and CFO demographic similarities
Investigated the role of analyst coverage in earnings management
Examined the use of discretionary accruals based on these relationships
CFOs with greater demographic similarity to celebrity CEOs show increased use of discretionary accruals
High levels of analyst coverage reduce the impact of CEO-CFO similarity on earnings management
CFO compliance plays a critical role in the dynamics of financial reporting influenced by CEO preferences

Abstract

This study explores the relational dynamics between the CEO and the CFO that shape the CEO’s engagement in earnings management. Specifically, we investigate how CEO-CFO demographic similarity and analyst coverage interact to influence the CFO’s willingness to comply with the celebrity CEO’s earnings management preferences. Our findings show that the use of discretionary accruals is more pronounced when CFOs share greater demographic similarity with celebrity CEOs; however, this effect diminishes in firms with high levels of analyst coverage. By highlighting CFOs’ compliance as a critical boundary condition that enables celebrity CEOs’ influence over a firm’s financial reporting, this study provides a more nuanced explanation of how executive preferences are enacted within organizations, contributing to upper echelons theory and earnings management research. JEL CLASSIFICATION: M12; G34

问 AI

Bookmark

View Full Paper