Early Poverty Experience Of Senior Executives And Corporate Earnings Management

As the main source for stakeholders to obtain corporate operating information,how to ensure the authenticity of financial reports is always an important issue in practice and academia.The supervision of managers is a crucial part of the task of improving the reliability of accounting information.Therefore,it is necessary to investigate the influence of managers’ characteristics on earnings manipulation behavior.Many studies have noted that personal characteristics are strongly influenced by early experiences,with childhood poverty having lifelong effects on physiology and personality.And when people who experienced extreme poverty in their early years enter enterprises and become senior executives,they will surely reflect the decisionmaking of the business.Therefore,this thesis explores whether early poverty experience of business manager makes a difference in two types of earnings manipulations,and the moderating effect of competitive and regulatory environment.This thesis measures poverty experience by whether senior executives experienced the Great Famine in childhood from 1959 to 1961.The results show that executives who experience extreme poverty in their early years inhibit both accruals and real means of earnings manipulation in the company.In addition,this effect changes with industry competition,internal controls,and the level of analyst attention.First,in a competitive environment,poor executive pays more attention to controlling real earnings manipulation,but the level of restraining accrual earnings manipulation has not changed significantly.Second,the efficient internal control environment will also promote poor executives to reduce the level of real earnings manipulation.Similarly,the level of restraining accrual earnings manipulation has not promoted significantly.Third,analyst attention does not play the role of external supervision as expected.On the contrary,as analysts’ attention has increased,poor executives begin to gradually relax their restraints on the two types of earnings manipulations.This article may enrich the research on early poverty experience of senior executives and corporate earnings manipulation.Moreover,we hope that it can also provide references for companies to supervise managers and to supervise managers and avoid counterfeiting.