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CEO power and earnings announcement tone with emphasis on the role of board oversight
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Mohammad Javad Zare Bahnamiri *1   , Zahra Heidary Surshjani , Zahra Joudaki Chegeni |
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Abstract: (4385 Views) |
The value of earnings reporting depends on the information it provides to the capital market. In the meantime, managers with the power and control of the situation interfere not only in quantity but also in the quality of reporting, so they declare profit in a more positive tone. However, supervisory management leads to protecting shareholder interests and reducing agency problems, limiting these managers' willingness to use an exaggerated tone in their earnings announcement. But in the absence of sufficient theoretical and empirical evidence in this area, the present study examines the relationship between the CEO power (CEO tenure, CEO duality & Manager's ability) and earnings announcement tone with emphasis on the role of board oversight (board meeting & Percentage of Non-Board Members). For this purpose, a sample of 109 companies listed in Tehran Stock Exchange during the period 2013-2017 was tested. The results of the research hypothesis test by multiple regression show that earnings announcement tone is significantly positively associated with CEO tenure and Manager's ability. In addition, Percentage of Non-Board Members of directors weaker the relationship between management ability & earnings announcement tone, but board meetings have no significant effect on the relationship. In addition, board supervision did not have a significant effect on the relationship between CEO tenure and earnings tone. The non-Board Members have a significant effect on the relationship between CEO's duality and earnings tone, but the number of board meetings has no effect on this relationship. This research helps the board to increase financial flexibility and attract investors' attention to the power of executive management.
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| Keywords: CEO power, board, oversight earnings announcement tone, Manager's ability |
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Full-Text [PDF 1149 kb]
(515 Downloads)
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Type of Study: Research |
Subject:
Special
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