Playing it ethical or safe? Examining the effects of executive military experience on earnings management
Abstract
Purpose
This study aims to investigate whether and how the executive military experience influences accrual-based earnings management and real earnings management.
Design/methodology/approach
Based on a sample of 4,392 listed firms in China between 2006 and 2022, this study examines the theoretical hypotheses by performing multiple regressions with fixed effects and a battery of robustness tests.
Findings
With a focus on executives’ decisions on the choice between two earning management methods, this paper find military executives reduce accrual-based earnings management but increase real earnings management. The mechanism of risk-aversion is verified in the post hoc analysis.
Originality/value
Most studies argue that military experience, which represents a strong sense of duty and self-discipline, can help to reduce corporate unethical behaviors. The study extends the existing literature on executives’ military experience by identifying risk-aversion rather than ethical values as the potential mechanism through which executives’ military experience affects earnings management.
Keywords
Acknowledgements
The authors thank editors and anonymous reviewers for their helpful comments and suggestions. All errors are their own.
Fundings: This work was supported by the National Natural Science Foundation of China [grant number: 72472066] and Xi’an Jiaotong-Liverpool University [grant number: RDF-22-01-028].
Citation
Xu, Y., Zhang, Y. and Zhao, J. (2024), "Playing it ethical or safe? Examining the effects of executive military experience on earnings management", Chinese Management Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CMS-11-2023-0632
Publisher
:Emerald Publishing Limited
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