Passing Probation: Earnings Management by Interim CEOs and Its Effect on Their Promotion Prospects

Drawing on chief executive officer (CEO) succession research and the impression management literature, we examine earnings management by interim CEOs, its impact on interim CEOs’ promotion prospects, and the moderating effect of governance mechanisms on the relationship between the two. Based on a sample of 145 interim CEO succession events in U.S. public firms from 2004 to 2008, we find that (a) an interim CEO is more likely than a noninterim...