CEO Regulatory Focus and Accounting Conservatism
Date Issued
2015
Date
2015
Author(s)
Wu, Lin-Chih
Abstract
Motivated by prior studies that examine the effect of managerial attributes on corporate policies and strategies, this study examines the relation between CEOs’ regulatory focus and accounting conservatism. According to regulatory focus theory (Crowe and Higgins, 1997), people with promotion focus tend to be riskier to seek for achievement, whereas people with prevention focus are more conservative to avoid mistakes. I measure accounting conservatism using Basu’s (1997) model and C_Score (Khan and Watts, 2009) and examine whether CEOs with promotion focus are more conservative than CEOs with prevention focus. I find that CEO’s prevention focus is positively associated with accounting conservatism, suggesting that CEOs with prevention focus is more risk-averse and have higher tendency to be conservative than the other CEOs.
Subjects
Regulatory Focus
Promotion Focus
Prevention Focus
Accounting Conservatism
Type
thesis