Staggered Terms And Earnings Management

Earnings management is a common problem in the listed companies in China. Managers are responsible for the company's strategic decision-making, and play a vital role in the manipulation of earnings management and the mode of operation. At the same time, based on the compensation contract, managers will abuse the authority to seize their own interests in the management process. How to restrain the earnings management behavior of self-interest management, and effectively protect the interests of shareholders, has become an important research in the capital market.According to the high level ladder theory, heterogeneity of management team can reduces the team cohesion and work efficiency, and hinders cooperation among team members. But the "distance" made by the heterogeneity of management team suppress the "collusion" of management. In the corporate executive team, CEO and CFO both play an important role in the decision of earnings management. While the staggered terms enhanced heterogeneity between them, and made it hard for them to consensus on earnings management.This paper made a research based on the self-interested management with 6884 data from 2007 to 2014 to explore the impact between staggered terms and earnings management. The results show that the management of the listed companies takes the behavior of earnings management to pursuing self-benefit maximization. Most companies choose the way of real activity earnings management. The staggered term between CEO and CFO has a restraining effect on earnings management, and when the staggered is greater, the inhibitory effect is stronger. Besides, CEO and CFO staggered terms can inhibit the earnings management behavior lead by the self-interested management, and it has stronger inhibitory effect on real activity earnings management.This study enriches the research content of team heterogeneity, and provides a new perspective for the research of earnings management. At the same time, it can improve the level of corporate governance by setting staggered terms, restrain earnings management, and improve the protection of investors'interests.