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An International Meeting of American Accounting
Association
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Do CEOs From Financially Sound Firms Exhibit Opportunistic Behavior Prior to a Voluntary Non-Routine Departure |
John T. Rigsby
Mississippi State University
Ralph E. Bourret
Mississippi State University
Abstract: The departure of chief executive officers (CEOs) from financially sound firms is examined to determine if there is a difference between anticipated and unanticipated departures by examining whether the study group’s CEOs manipulated total accruals prior to their departure. The study postulates that Pourciau’s (1993) and Wells (2002) findings of a downward reduction in accruals and net income prior to the CEO’s non-routine departure was driven by the poor performing firms included in the studies. The results indicate that the total accruals of the study group’s CEOs were lower than those of the CEOs in the control group and also that the accruals of the study group CEOs were more closely aligned with future cash flow than those of CEOs in the control group. These results indicate that it was not poor performance that led to the decrease in accruals but alternative possible explanations.