Executives' Military Experience and Corporate Earnings Management: A New Perspective on the Military-civilian Integration Strategy
- QUAN Xiaofeng, CU Weihua & XU Xingmei
- QUAN Xiaofeng (Soochow University, 215021)CU Weihua (Xiangtan University, 411105)XU Xingmei (Renmin University of China, 100872)
The military-civilian integration strategy is a national strategy aimed at two goals at the same time: building a rich country and a strong army. Executives with military experience are the living examples of the deep integration of the military talent resources and the civilian economic development. From the perspective of corporate earnings management, this paper analyzes the impact and regulating factors of executives' military experience on accrued and real earnings management. Firstly, compared to companies whose executives have no military experience, companies whose executives have a military background have higher levels of management over accrued earnings and sale-controlled real earnings, meaning these companies are more aggressive in financial decision making. Secondly, the survey on regulating factors shows that the positive impact of executives' military experience on earnings management is more significant in state-owned enterprises and in companies with higher decision-making power. Finally, further investigation on military experience finds that the earnings management level is higher when executives have a longer service period or a higher military ranking, which shows that the relationship between executives' military experience and earnings management is affected by the depth and achievements of their military life. The paper extends the theoretical research of the “culture and finance” paradigm, adds determinants to earnings management literature, and provides a micro, individual perspective and empirical evidence of the economic impact and working mechanism of the military culture on corporate financial behaviors, shedding light on the implementation of the military-civilian integration strategy.
JEL：D91, G41, M48
- Military Experience, Accrued Earnings Management, Real Earnings Management, Organizational Culture, Management Style