Who checks the new boss? Company secretaries’ commercial attributes, CEO succession, and real earnings management in Malaysian public listed companies

The integrity of financial reporting is increasingly undermined by real earnings management (REM), which distorts operational decisions to meet short-term performance targets. This study examines how Chief Executive Officer (CEO) succession characteristics of early-tenure CEOs (EARLY) and heir-apparent CEOs (HEIR) in particular influence REM in Malaysian Public Listed Companies (PLCs), and whether company secretaries’ commercial attributes (CSCOMM) condition these relationships. Drawing on Agency Theory and Resource Dependence Theory (RDT), this study argues that succession alters managerial incentives for REM, while the effectiveness of procedural governance resources depends on leadership context. Using 1,302 firm-year observations from 2017 until 2019, and Panel-Corrected Standard Errors (PCSE) with firm and year fixed effects, the results show that EARLY are not significantly associated with REM, and that CSCOMM do not moderate this relationship. In contrast, HEIR exhibit a significant negative association with REM, which is further strengthened when company secretaries possess commercial capabilities. These findings are robust to alternative REM proxies and lagged specifications. The study contributes to governance research by highlighting the contingent role of company secretaries as procedural governance actors during leadership transitions. From a policy perspective, the findings support ongoing corporate governance reforms, underscoring the importance of strengthening company secretaries’ commercial competencies and aligning their advisory roles with CEO succession to enhance financial reporting integrity in Malaysian PLCs.

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