CEO incentives and earnings management

CEO incentives and earnings management We provide evidence that the use of discretionary accruals to manipulate reported earnings is more pronounced at firms where the CEO's potential total compensation is more closely tied to the value of stock and option holdings. In addition, during years of high accruals, CEOs exercise unusually large numbers of options and CEOs and other insiders sell large quantities of shares. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

CEO incentives and earnings management

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Publisher
Elsevier
Copyright
Copyright © 2005 Elsevier B.V.
ISSN
0304-405x
D.O.I.
10.1016/j.jfineco.2004.10.011
Publisher site
See Article on Publisher Site

Abstract

We provide evidence that the use of discretionary accruals to manipulate reported earnings is more pronounced at firms where the CEO's potential total compensation is more closely tied to the value of stock and option holdings. In addition, during years of high accruals, CEOs exercise unusually large numbers of options and CEOs and other insiders sell large quantities of shares.

Journal

Journal of Financial EconomicsElsevier

Published: Jun 1, 2006

References

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