From Watchdog to Watchman : Do Independent Directors Monitor a CEO of Their Own Age?

We examine the impact of the social attachment through age similarity between the independent directors and the CEO on earnings management. Using changes in independent director composition due to director death and retirement for identification, we find that firms with the presence of the independent directors who have the same age of the CEO are more likely to manage earnings, and this positive impact decreases as the age gap widens, but is intensified if the independent directors share other characteristics with the CEO, including gender, education level, nationality and executive experience, and if the independent directors sit on audit or nomination committees. Overall, our results that suggest the social attachment due to age similarity with the CEO weakens the intensity of board monitoring