Top Management Team Characteristics and Accrual-Based Earnings Management

Yu Ting Hsieh, Tsung-Kang Chen, Yi Jie Tseng*, Ruey Ching Lin

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


This study examines how top management team (TMT) knowledge and average tenure affect accrual-based earnings management by investigating 4791 Taiwanese listed companies from 2006 to 2010. TMT members with more knowledge (higher education level, more accounting expertise, and greater prior top management experience) and longer average tenure have better performances and higher reputations, and are more aware of the litigation costs of earnings manipulations; therefore, they reduce managers’ incentives to manage earnings (incentive-reduction effect). On the other hand, these TMT members are also likely to become entrenched and engage in more earnings manipulations (entrenchment-enhancing effect). The empirical results show that firms’ TMT knowledge and average tenure are negatively associated with discretionary accruals, suggesting that the incentive-reduction effect is stronger than the entrenchment-enhancing effect, which makes TMT members less likely to engage in earnings management. Moreover, the above results are robust when employing different earnings management measures and suspect firm analyses, as well as considering endogeneity issues. Finally, the study suggests that the presence of a founding family may reduce the influences of TMT knowledge and average tenure on earnings management.

Original languageEnglish
Pages (from-to)314-334
Number of pages21
JournalInternational Journal of Accounting
Issue number4
StatePublished - 1 Dec 2018


  • Average tenure
  • Earnings management
  • Top management team knowledge

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