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Title: Employee turnover likelihood and earnings management : evidence from the inevitable disclosure doctrine
Authors: Gao, Huasheng
Zhang, Huai
Zhang, Jin
Keywords: Earnings Management
Employee Turnover Likelihood
Issue Date: 2018
Source: 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
Series/Report no.: Review of Accounting Studies
Abstract: 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.
ISSN: 1380-6653
DOI: 10.1007/s11142-018-9475-x
Rights: 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:
Fulltext Permission: open
Fulltext Availability: With Fulltext
Appears in Collections:NBS Journal Articles

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