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Review of Quantitative Finance and Accounting

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01.05.2016 | Original Research

CFO gender and earnings management: evidence from China

verfasst von: Yu Liu, Zuobao Wei, Feixue Xie

Erschienen in: Review of Quantitative Finance and Accounting | Ausgabe 4/2016

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Abstract

We study the effect of chief financial officer (CFO) gender on earnings management (EM) in China’s listed firms from 1999 to 2011. In the cross-sectional analysis, we find that female CFO firm-years exhibit significantly lower discretionary accruals, lower total accruals, lower abnormal production costs, and higher abnormal discretionary expenditures, than the male CFO firm-years. We further examine the relation between CFO gender and EM surrounding CFO transitions. We find that the departing male CFOs are more aggressive than the departing female CFOs in managing up earnings during their last year with the firm and the newly appointed male CFOs are more aggressive than the new female CFOs in managing down earnings during their first year on the job. The evidence surrounding CFO transitions suggests that male CFOs are more aggressive than female CFOs in manipulating earnings, either in the last attempt to save their jobs or to take bigger credit for any future performance gains. Overall, our empirical evidence suggests that female CFOs engage in less EM and are more conservative in financial reporting than their male counterparts.

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Our results do not show a significant difference between male and female CFOs in sales manipulation, we hence do not focus on this measure of EM in our study.

Please see the “Real activities-based measures” section in Appendix 1 for the description and estimation of our real activities-based earnings management measures.

There are 1,995 unique firms in the sample and 108 of them stay for the entire sample period.

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Titel: CFO gender and earnings management: evidence from China
verfasst von: Yu Liu
Zuobao Wei
Feixue Xie
Publikationsdatum: 01.05.2016
Verlag: Springer US
Erschienen in: Review of Quantitative Finance and Accounting / Ausgabe 4/2016
Print ISSN: 0924-865X
Elektronische ISSN: 1573-7179
DOI: https://doi.org/10.1007/s11156-014-0490-0

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