Psychological Research in Management

Psychological Research in Management

Investigating the role and position of the chief executive officer social capital activities on the management of real profits and the future operational performance of companies (Evidence from Tehran Stock Exchange)

Document Type : Original Article

Authors
Hadi Kheirabadi 1
Eslami Mofid Abadi Hossein 2
Ehsan Rahmaninia 3
1 Master student in Accounting, Department of Accounting, North Tehran Branch of Islamic Azad University, Tehran, Iran.
2 Department of Accounting and Management, Shahriar Branch of Islamic Azad University, Shahriar, Iran.
3 Master student, Department of Accounting, North Tehran Branch, Islamic Azad University, Tehran, Iran.
Abstract
The main aim of the current research was to investigate the role and place of CEO's social capital activities on real profit management and future operational performance of companies. The present research method was descriptive-survey. The statistical population of the study included the companies admitted to the Tehran Stock Exchange in the period from 2010 to 2021. The sampling method of the research has also been done regularly. Correlation analysis and multivariate regression methods have been used to test the hypotheses and estimate the empirical model of the research. Also, in this research, in order to test the hypotheses of the research, Excel software, a statistical software of the statistical package for the social sciences (SPSS), has been used, and for the estimation calculations of the models of the present research, the econometric Eviews software has been used. In general, the general results of the present research show that the role and position of the CEO's social capital activities have a significant effect on the real profit management and the future operational performance of the companies admitted to the Tehran Stock Exchange.
Keywords
CEO's social capital
Real earnings management
Future operating performance of companies
Subjects

  1.  

    1. امیری، حسین؛ نجفی‌نژاد، محمود؛ موسوی، سیده محدثه و حسنی، محمدحسین (1399). جریانی از سرمایه اجتماعی و عوامل مؤثر بر آن در ایران. برنامه‌ریزی رفاه و توسعه اجتماعی، دوره 12، شماره 43، ص 89-124.
    2. خواجوی، شکراله؛ بایزیدی، انور و جبارزاده کنگرلویی، سعید (1390). بررسی رابطه بین مدیریت سود و مسئولیت‌پذیری اجتماعی شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران. پیشرفت‌های حسابداری  علوم اجتماعی و انسانی شیراز، دوره 3، شماره 1، ص 29-54.
    3. خیر الهی، فرشید؛ بهشور، اسحاق و ایوانی، فرزاد (1395). مدیریت سود واقعی، سطوح و ارزشیابی نگهداشت وجه نقد در شرکت‌ها. پژوهش‌های حسابداری مالی و حسابرسی، دوره 8، شماره 30، ص 1-14.
    4. رحیمی، رضا و زالی، نادر (1392). بررسی وضعیت مؤلفه‌های سرمایه اجتماعی شهری در شهرهای مرکزی استان آذربایجان شرقی. جامعه‌شناسی کاربردی، دوره 24، شماره 1، ص 209 -230.
    5. رحیمی، سمیرا؛ لشگری، زهرا و حاجیها، زهره (1394). سرمایه اجتماعی و مدیریت سود. نشریه چشم‌انداز مدیریت مالی، دوره 5، شماره 12، ص 13-26.
    6. صالحی، عباس (1397). بررسی تأثیر ویژگی‌های مدیرعامل بر میزان مدیریت سود واقعی و عملکرد آتی شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران، سومین همایش ملی اقتصاد. مدیریت و حسابداری ایران، جیرفت.https://civilica.com/doc/867223/.
    7. کریمی، مریم (1399). عملکرد عملیاتی شرکت. ششمین کنفرانس ملی پژوهش‌های کاربردی در مدیریت، حسابداری و اقتصاد سالم در بانک، بورس و بیمه، تهران، https://civilica.com/doc/1122180/
    8. محمدزاده سالطه، حیدر؛ ابیضی، عیسی و محبعلی پور، مهدی (1399). تأثیر سرمایه اجتماعی بر هزینه سرمایه با تأکید بر عدم تقارن اطلاعاتی. پژوهش‌های حسابداری مالی و حسابرسی، دوره 12، شماره 46، ص 232 -203.
    9. محمدی، سید موسی؛ غلامی جمکرانی، رضا؛ فلاح شمس، میرفیض و افلاطونی، عباس (1398). سرمایه اجتماعی مدیران و عملکرد مالی بانک‌ها. حسابداری ارزشی و رفتاری، دوره 4، شماره 7، ص ۳۸۱-401.
    10. ملازاده، محمد؛ لاری دشت بیاض، محمود و ساعی، محمدجواد (1395). تأثیر دانش مالی مدیرعامل بر روی مدیریت سود. پژوهش‌های حسابداری مالی و حسابرسی (پژوهشنامه حسابداری مالی و حسابرسی)، دوره 8، شماره 30، ص 837-59.
    11. Ahmed, A., Lobo, G., & Zhou, J. (2001). Job Security and Income Smoothing: An Empirical Test of the Model, Paper Prepared for Presentation at The Annual Meetings of American Accounting Association and The CAAA annual conference.
    12. Attig, N., El Ghoul, S., Guedhami, O., & Suh, J. (2013). Corporate social responsibility and credit ratings. Journal of business ethics, 117(4), 679-694.
    13. Barton, J., & Simko, P.J. (2002). The balance sheet as an earnings management constraint. The accounting review, 77(1), 1–27.
    14. Bartov, E. (1993). The timing of asset sales and earnings manipulation. The Accounting Review, 68(4), 840–855. https://www.jstor.org/stable/248507.
    15. Bebchuk, L.A., Cremers, K.J.M., & Peyer, U.C. (2011). The CEO pay slice. Financ. Econ. 102(1), 199–221.
    16. Bens, D.A., Nagar, V., & Wong, M.H.F. (2002). Real investment implications of employee stock option exercises. Account. Res. 40(2), 359–393.
    17. Bhandari, A., Mammadov, B., Shelton, A., & Thevenot, M. (2018). It is not only what you know, it is also who you know: CEO network connections and financial reporting quality. J. Pract. Theory, 37(2), 27–50.
    18. Boyer, M. M., & Molina, H. O. (2006). Career Concerns of Top Executives, Managerial Ownership and CEO Succession. Sauder School of Business Working Paper.
    19. Brass, D.J., & Burkhardt, M.E. (1992). Networks and organizations: structure, form, and action. In: Centrality and Power in Organizations. In N. Nohria & R. Eccles (Eds).
    20. Brown, L.D., & Caylor, M.L. (2005). A temporal analysis of quarterly earnings thresholds: propensities and valuation consequences. The Accounting Review, 80 (2), 423.
    21. Burt, R.S. (2000). In: Sutton, R., Staw, B. (Eds.), The Network Structure of Social Capital. JAI Press, Greenwich CT.
    22. Christoforou, A. (2010). Social capital and human development: an empirical investigation across European countries. Journal of Institutional Economics, 6(2), 191-214.
    23. Cohen, D.A., Dey, A., Lys, T.Z. (2008). Real and accrual-based earnings management in the pre-and post-Sarbanes-Oxley periods. Rev. 83(3), 757–787.
    24. Cohen, D.A., & Zarowin, P. (2010). Accrual-based and real earnings management activities around seasoned equity offerings. Journal of accounting and Economics, 50(1), 2–19.
    25. Coleman, J.S. (1988). Social capital in the creation of human capital. American journal of sociology, 94, 95–120.
    26. Dechow, P.M., Hutton, A.P., Kim, J.H., & Sloan, R.G. (2012). Detecting earnings management: a new approach. Journal of accounting research, 50(2), 275–334.
    27. Dechow, P.M., & Sloan, R.G. (1991). Executive incentives and the horizon problem. Journal of accounting and Economics, 14(1), 51–89.
    28. Dechow, P.M., Sloan, R.G., & Sweeney, A.P. (1995). Detecting earnings management. Accounting review, 70(2), 193–225.
    29. Dechow, P.M., Sloan, R.G., & Sweeney, A.P. (1996) Causes and consequences of earnings manipulation: an analysis of firms subject to enforcement actions by the SEC. Contemporary accounting research, 13(1), 1–36.
    30. Defond, M. L., & Park. C. W. (1997). Smoothing Income in Anticipation of Future Earning. Journal of Accounting and Economic, 1(23), 115-139.
    31. Demski, J.S., Frimor, H., & Sappington, D.E.M. (2004). Efficient manipulation in a repeated setting. Journal of Accounting research, 42(1), 31–49.
    32. El-Khatib, R., Fogel, K., & Jandik, T. (2015). CEO network centrality and merger performance. Journal of Financial Economics, 116(2), 349–382.
    33. Engelberg, J., Gao, P., & Parsons, C.A. (2012). Friends with money. Journal of Financial Economics, 103(1), 169–188.
    34. Ewert, R., & Wagenhofer, A. (2005). Economic effects of tightening accounting standards to restrict earnings management. The Accounting Review, 80(4), 1101–1124.
    35. Faleye, O., Kovacs, T., & Venkateswaran, A. (2014). Do better-connected CEOs innovate more?. Journal of Financial and Quantitative Analysis, 49(5–6), 1201–1225.
    36. Fang, Y., Hasan, I., & Wang, H., (2019). Do social networks encourage risk-taking?. In: Evidence from bank CEOs, DJB Discussion Paper 1902, Stuart School of Business.
    37. Ferris, S. P., Javakhadze, D., & Rajkovic, T. (2019). An international analysis of CEO social capital and corporate risk‐ European Financial Management, 25(1), 3-37.
    38. Ferris, S.P., Javakhadze, D., & Rajkovic, T. (2017). CEO social capital, risk-taking and corporate policies. Journal of Corporate Finance, 47, 46–71.
    39. Fracassi, C. (2016). Corporate Finance Policies and Social Networks. Management Science, 63(8), 2420-2438.
    40. Fracassi, C., & Tate, G. (2012). External networking and internal firm governance. The Journal of finance, 67(1), 153–194.
    41. Fudenberg, D., & Tirole, J. (1995). A Theory of Income and Dividend Smoothing Based on Incumbency Rents. Journal of Political Economy, 103, 75-93.
    42. Gilliam, T.A., Heflin, F., & Paterson, J.S. (2015). Evidence that the zero-earnings discontinuity has disappeared. Journal of Accounting and Economics, 60(1), 117–132.
    43. Goss, A., & Roberts, G. S. (2011). The impact of corporate social responsibility on the cost of bank loans. Journal of Banking & Finance, 35(7), 1794-1810.
    44. Graham, J.R., Harvey, C.R., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of economic perspectives, 40(1–3), 3–73.
    45. Granovetter, M. (2005). The impact of social structure on economic outcomes. Econ. Perspect, 19(1), 33–50.
    46. Griffin, P. A., Hong, H. A., Liu, Y., & Ryou, J. W. (2021). The dark side of CEO social capital: Evidence from real earnings management and future operating performance. Journal of Corporate Finance, 68, 101920.
    47. Hanifan, L. J. (1916). Evening classes for West Virginia elementary schools. Charleston, WV, Department of Free Schools.
    48. Haunschild, P.R. (1993). Interorganizational imitation: the impact of interlocks on corporate acquisition activity. Administrative science quarterly, 38(4), 564–592.
    49. Hausman, J.A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251–1271.
    50. Healy, P. M. & Wahlen, J. M. (1999). A Review of the Earnings Management Literature and its Implications for Standard Setting. Accounting Horizons, 13, 365-383.
    51. Hwang, B.-H., & Kim, S. (2009). It pays to have friends. Journal of financial economics, 93(1), 138–158.
    52. Inkpen, A.C., & Tsang, E.W.K. (2005). Social capital, networks, and knowledge transfer. Academy of management review, 30(1), 146–165.
    53. Javakhadze, D., Ferris, S.P., & French, D.W. (2016). Social capital, investments, and external financing. Journal of Corporate Finance, 37, 38–55.
    54. Jiang, H., Habib, A., & Wang, S. (2018). Real earnings management, institutional environment, and future operating performance: An international study. The International Journal of Accounting, 53(1), 33-53.
    55. Karahanna, E., & Preston, D. S. (2013). The effect of social capital of the relationship between the CIO and top management team on firm performance. Journal of management information systems, 30(1), 15-56.
    56. Ke, R., Li, M., Ling, Z., & Zhang, Y. (2019). Social connections within executive teams and management forecasts. Management Science, 65(1), 439–457.
    57. Kim, J.B., & Sohn, B.C. (2013). Real earnings management and cost of capital. Journal of Accounting and Public policy, 32(6), 518–543.
    58. Koh, K., Matsumoto, D.A., & Rajgopal, S. (2008). Meeting or beating analyst expectations in the post-scandals world: changes in stock market rewards and managerial actions. Journal of accounting and economics, 25(4), 1067–1098.
    59. Lanouar, C., Wided, B. (2012). Income Smoothing and CEO Job Security. Information Management and Business Review, 4(3), 95-106.
    60. Larcker, D.F., So, E.C., & Wang, C.C. (2013). Boardroom centrality and firm performance, Journal of Accounting and Economics, 55(2), 225–250.
    61. Mizruchi, M.S. (1996). What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annual review of sociology, 22(1), 271–298.
    62. Mizruchi, M.S., & Potts, B.B. (1998). Centrality and power revisited: actor success in group decision making. Social networks, 20(4), 353–387.
    63. Reagans, R., & McEvily, B. (2003). Network structure and knowledge transfer: the effects of cohesion and range. Administrative science quarterly, 48(2), 240–267.
    64. Richardson, S.A., Tuna, A., & Wu, M. (2002). Predicting Earnings Management: The Case of Earnings Restatements. Available at SSRN 338681.
    65. Scott, W.R. (2003). Financial Accounting Theory, Third Edition. Upper Saddle River, NJ: Prentice Hall.
    66. Shue, K. (2013). Executive networks and firm policies: evidence from the random assignment of MBA peers. The Review of Financial Studies, 26(6), 1401–1442.
    67. Trueman, B., & Titman, S. (1988). An explanation for accounting income smoothing. Journal of Accounting Research, 26, 127–139.
    68. Wans, N. (2020). Corporate Social Responsibility and Market-Based Consequences of Adverse Corporate Events: Evidence from Restatement Announcements. Journal of Accounting, Auditing & Finance, 35(2), 231–262. https://doi.org/10.1177/0148558X17725968
    69. Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory, Englewood Cliffs, NJ: Prentice-Hall.
    70. Zang, A. (2012). Evidence on The Trade-off between Real Activities Manipulation and Accrual-Based Earnings Management. The Accounting Review, 87(2), 675-703.

     

Psychological Research in Management
Volume 8, Issue 2
September 2022
Pages 177-201