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Income Smoothing, Idiosyncratic Risk & CEO Turnover

Authors :
Xingguo Zhang
Source :
Journal of Mathematical Finance. :1-13
Publication Year :
2016
Publisher :
Scientific Research Publishing, Inc., 2016.

Abstract

The article discussed the feasibility from the idiosyncratic risk point of view that CEO enhances the stability of its position by income smoothing. Taking the data of A-share companies listed in Shanghai Stock Exchange and Shenzhen Stock Exchange between 2005 and 2011, the article examined the direct influence of income smoothing upon change of CEO and its indirect influence upon change of CEO by influencing idiosyncratic risks. The article found that the increase of the income smoothing degree would significantly decrease the probability of change of CEO, while the increase of idiosyncratic risks would significantly increase the probability of change of CEO. In addition, the influence of income smoothing upon change of CEO, to a great extent, is realized by influencing idiosyncratic risks. The evidences used in the article show that one of CEO’s major motives to perform income smoothing is to safeguard its position.

Details

ISSN :
21622442 and 21622434
Database :
OpenAIRE
Journal :
Journal of Mathematical Finance
Accession number :
edsair.doi...........b4ab48f26cf7f547acb6e253e17d9e15
Full Text :
https://doi.org/10.4236/jmf.2016.61001