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Value or Glamour? An empirical investigation of the effect of celebrity CEOs on financial reporting practices and firm performance
Author(s) -
Koh Kevin
Publication year - 2011
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.2010.00357.x
Subject(s) - accounting , reputation , business , earnings management , earnings , sample (material) , value (mathematics) , empirical evidence , enterprise value , finance , political science , chemistry , chromatography , machine learning , computer science , law , philosophy , epistemology
In this study, I investigate the impact of managerial reputation, as proxied by high‐profile awards to CEOs, on financial reporting practices and firm performance. Using a sample of 269 awards given to 189 celebrity CEOs (CEOs who win awards) from 1987 to 2003, I compare within‐firm changes in financial reporting practices and firm performance before and after each CEO wins their first award. I find that celebrity CEOs engage in more conservative accounting practices and are less likely to engage in opportunistic earnings management to meet short‐term earnings benchmarks. In addition, firm performance improves after celebrity CEOs win awards.