The role of Chief Executive Officer (CEO) in Corporate Governance and Earnings Management

Abstract

Abstract. This research was conducted to provide evidence on the effect of CEO change and CEO’s tenure along on earnings management. Hence, a sample composed of 108 companies listed on Tehran Stock Exchange was selected and evaluated during a period of 9 years (2004-2012). To test hypotheses, the approach of combined data was used. In this research, using the modified Jones model, discretionary accruals were estimated. The results indicated that there was a positive and significant relationship between the CEO change and earnings management. They are also indicative of a negative and significant relationship between the CEO’s tenure and earnings management.