CEO Turnover and Earning Management：The Evidence from the Banking Industry in Taiwan

• Main Authors: Sun, Yu-Hsuan, 孫瑀萱
• Other Authors: Wang, Chien-An
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/g6kygx

碩士 === 國立暨南國際大學 === 財務金融學系 === 102 === To avoid be dismissed by poor performance, the chief executive officers (CEO) might have incentive to engage upper-profit management which is to cover up poor performance. Perhaps they might pursue better position or better retirement pension so as to have a motivation to engage upper-profit management, which is the horizon problem.On the other hand, the succeeding CEOs also have some reasons to engage profit management for the sake of building the reputation in a short time and improving performance. Therefore, there might generate the action of “big bath”. In this research it divides the reasons of CEO’s resignation into voluntary resignation and forced resignation and also takes the succeeding CEO’s original position into consideration and discussion. Furthermore, it distinguishes the operation form of banks between public-operated and privately operated operation.This research is not only to analyze the trend of loan loss provision(LLP), charge-off and recovery in bad debts allowance within the year of CEO exchange and two years before and after. Meanwhile it also analyzes the relationship between the strategy of big bath and remuneration by observing the current year of CEO substitution’s emolument and the next year of successor’s payment. According to four classifications, public and privately operated banks, the result found that ex-CEO generated non-profit management.Nonetheless, bad debts withdraw and charge-off in currently CEO exchanged year would significantly bigger than those in its past two years, which would support the new CEO to substantially increasing loan loss provision and in the first year of their assumption of duty. Also the massive bad debts charge-off represent that the new CEO would manipulate big bath in the first year of new CEO’s assumption of control. Moreover, comparing with the privately operated banks, the public operated banks would more likely operate significant big bath strategy. This research utilizes ten cases of uncovered CEO payments and matches the bad debts’ withdraw and written off in the current and next year of assumption of CEO duty. The result demonstrates that CEO would lower the profit by massive withdraw and charge-off in bad debts. As a result, the profit and CEO’s emolument in following year would both markedly rise.