Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine

Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine

We present evidence that managers consider employee turnover likelihood in their accounting choices. Our tests exploit U.S. state courts’ staggered recognition of the inevitable disclosure doctrine (IDD), which reduces employees’ ability to switch employers. We find a significant decrease in upward...

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Main Authors: Gao, Huasheng, Zhang, Huai, Zhang, Jin
Other Authors: Nanyang Business School
Format: Article
Language:English
Published: 2019
Subjects:
Earnings Management
Business::Accounting
Employee Turnover Likelihood
Online Access:https://hdl.handle.net/10356/104689
http://hdl.handle.net/10220/50286
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Institution: Nanyang Technological University
Language: English
id sg-ntu-dr.10356-104689
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spelling sg-ntu-dr.10356-1046892023-05-19T06:44:41Z Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine Gao, Huasheng Zhang, Huai Zhang, Jin Nanyang Business School Earnings Management Business::Accounting Employee Turnover Likelihood We present evidence that managers consider employee turnover likelihood in their accounting choices. Our tests exploit U.S. state courts’ staggered recognition of the inevitable disclosure doctrine (IDD), which reduces employees’ ability to switch employers. We find a significant decrease in upward earnings management for firms headquartered in states that recognize the IDD, relative to firms headquartered elsewhere. The effect of the IDD is stronger for firms relying more on human capital and for firms whose employees have higher ex-ante turnover likelihood, confirming the employee retention channel. Overall, our results support the view that retaining employees is an important motive for corporate earnings management. Accepted version 2019-10-30T06:05:45Z 2019-12-06T21:37:37Z 2019-10-30T06:05:45Z 2019-12-06T21:37:37Z 2018 Journal Article Gao, H., Zhang, H., & Zhang, J. (2018). Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine. Review of Accounting Studies, 23(4), 1424-1470. doi:10.1007/s11142-018-9475-x 1380-6653 https://hdl.handle.net/10356/104689 http://hdl.handle.net/10220/50286 10.1007/s11142-018-9475-x en Review of Accounting Studies This is a post-peer-review, pre-copyedit version of an article published in Review of Accounting Studies. The final authenticated version is available online at: http://dx.doi.org/10.1007/s11142-018-9475-x 65 p. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic Earnings Management
Business::Accounting
Employee Turnover Likelihood
spellingShingle Earnings Management
Business::Accounting
Employee Turnover Likelihood
Gao, Huasheng
Zhang, Huai
Zhang, Jin
Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
description We present evidence that managers consider employee turnover likelihood in their accounting choices. Our tests exploit U.S. state courts’ staggered recognition of the inevitable disclosure doctrine (IDD), which reduces employees’ ability to switch employers. We find a significant decrease in upward earnings management for firms headquartered in states that recognize the IDD, relative to firms headquartered elsewhere. The effect of the IDD is stronger for firms relying more on human capital and for firms whose employees have higher ex-ante turnover likelihood, confirming the employee retention channel. Overall, our results support the view that retaining employees is an important motive for corporate earnings management.
author2 Nanyang Business School
author_facet Nanyang Business School
Gao, Huasheng
Zhang, Huai
Zhang, Jin
format Article
author Gao, Huasheng
Zhang, Huai
Zhang, Jin
author_sort Gao, Huasheng
title Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
title_short Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
title_full Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
title_fullStr Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
title_full_unstemmed Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
title_sort employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
publishDate 2019
url https://hdl.handle.net/10356/104689
http://hdl.handle.net/10220/50286
_version_ 1770564825051561984

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