We examine the role of CEO social capital as an important driver of the widespread practice of real earnings management (REM). Using the number of social connections to outside executives and directors to measure CEO social capital, we first find that well-connected CEOs associate with higher levels and volatilities of REM. The positive relation between REM and CEO network size is stronger when the CEO connects with more informed and influential persons, and when a more severe misalignment of interests can occur. Second, we find a contagion of REM among well-connected CEOs in an industry. Third, the level of REM induced by a large CEO social network associates negatively with future operating performance. This result is consistent with social capital circulating REM-related information ex-ante and increasing the power and influence for the CEO to deviate from optimal operating policies ex-post. Social capital shields the well-connected executive in the takeover and labor markets despite possible suboptimal future operating performance. While the prior literature finds that CEO social capital reduces accrual earnings management, our findings suggest a dark side of CEO social capital: it induces excessive levels and volatilities of REM costly to the firm in the long run while imposing relatively low personal risk on the top executive.

我们考察了首席执行官社会资本作为实际盈余管理（REM）广泛实践的重要驱动因素的作用。我们使用与外部高管和董事之间的社会联系数量来衡量CEO的社会资本，我们首先发现，联系良好的CEO与REM的较高水平和波动性相关。当首席执行官与知识渊博且有影响力的人建立联系，并且可能发生更为严重的利益失衡时，REM与首席执行官网络规模之间的正相关关系就更强。其次，我们发现REM在一个行业内关系密切的首席执行官之间蔓延。三，REM水平由大型CEO社交网络引起的负面影响与未来的运营绩效相关。该结果与事前流通与REM相关的信息的社会资本相一致，并且增加了CEO偏离事后最佳运营政策的权力和影响。社会资本保护了接管和劳动力市场中关系密切的高管，尽管未来的经营业绩可能不尽人意。虽然先前的文献发现CEO社会资本减少了应计收益管理，但我们的发现表明CEO社会资本的阴暗面：它导致REM的水平过高和波动性大。 从长远来看，这对公司而言代价高昂，而对高级管理人员的个人风险却相对较低。