Earnings Management and Annual General Meetings: The Role of Managerial Entrenchment
The Financial Review, Forthcoming
38 Pages Posted: 10 Aug 2012
Date Written: August 1, 2012
We examine earnings management around the annual general meeting (AGM) and assess the influence of managerial entrenchment. Consistent with prior research, we show positive and statistically significant abnormal returns surrounding AGMs regardless of the level of managerial entrenchment. We find evidence of significant earnings manipulation primarily among entrenched managers. Specifically, they manage abnormal accruals downwards two quarters prior to the AGM and significantly increase abnormal accruals in the quarter immediately before the AGM. Our evidence is consistent with AGMs triggering managers to disseminate information in a manner that shapes the market’s perception of the firm.
Keywords: Annual General Meeting, Earnings Management, Managerial Entrenchment, Shareholder Proposals
JEL Classification: G34, M41
Suggested Citation: Suggested Citation