Top management teams’ demographics effect on earnings management - A Swedish perspective

Abstract

We study whether the demographic characteristics of top management teams influence earnings management, by using a sample of Swedish listed firms from 2010-2014. Our findings suggest that the demographic characteristics (i.e. age, gender, education, financial work experience, international experience and tenure) of top management teams influence their earnings management activities. We find significance for both accruals-based and real activitybased earnings management, however, the results for accruals-based are notably weaker than for real activity-based earnings management. The upper echelons theory predictions are moderately consistent with our results. The results can nonetheless be used by people responsible for compiling and developing chief level executive teams, and additionally, by auditing firms when assessing the risk of top management conducting earnings management.