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Three Essays On Earnings Management And Executive Compensation
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Book Synopsis Three Essays on Earnings Management and Executive Compensation by : Heather Katherine Guthrie
Download or read book Three Essays on Earnings Management and Executive Compensation written by Heather Katherine Guthrie and published by . This book was released on 2006 with total page 82 pages. Available in PDF, EPUB and Kindle. Book excerpt: In chapter 2, I explore the possibility that current shareholders encourage CEOs to manage earnings around equity issuances, as artificially inflated stock prices allow shareholders to obtain external financing at lower cost. My main result establishes that CEOs in well-governed firms are more likely to have large positive discretionary accruals around equity issuances than CEOs in poorly-governed firms. The finding suggests that governance is a double-edged sword: good governance may limit misreporting when it hurts current shareholders, but it may exacerbate misreporting when current shareholders stand to benefit.
Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun
Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by DIANE Publishing. This book was released on 2010-08 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. Examines how the opportunity to manipulate affects the optimal pay contract, and establishes necessary and sufficient conditions under which earnings management occurs. The author¿s model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations. Charts and tables.
Book Synopsis Three Essays on Executive Compensation by : Brandon Neil Cline
Download or read book Three Essays on Executive Compensation written by Brandon Neil Cline and published by . This book was released on 2005 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Executive Compensation by : Timothy C. Carpenter
Download or read book Essays on Executive Compensation written by Timothy C. Carpenter and published by . This book was released on 2015 with total page 77 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines the effects resultant from compensation committees' decisions on the structure and magnitude of executive compensation packages. Executive compensation has long been a contentious topic, both in the U.S. and abroad. Specifically, equity-based pay (eg. options and stock grants) has been increasing in popularity and met with mixed reactions. This form of remuneration aims to properly align the goals of executives with those of their shareholders; however, the use of equity based-pay tends to result in larger pay packages. Thus, the potential reasons for its recent popularity range from a forthright belief in its optimality to more Machiavellian motives. Moreover, incentive compensation has a number of secondary effects which must be accounted for, including effects on executive retention and accounting quality among many others. This line of research aims to improve our understanding of executive pay so compensation committees can better serve their shareholders by crafting more appropriate pay packages and better understanding the potential benefits and consequences therefrom. In Chapter One, I analyze the effect of cumulative wealth and unvested equity compensation on voluntary CEO turnover. I find that wealthier CEOs are less likely to retire or resign. This suggests that the CEO vetting process is able to sort out those individuals who would substitute high wealth for additional leisure. Consistent with Balsam and Miharjo (2007), CEOs with more unvested equity are significantly less likely to leave their position. However, I find that unvested equity is less effective as a retention device if the CEO has high existing wealth. In contrast to prior results, my results show no significant relation between existing CEO wealth and incentive compensation. In Chapter Two, I analyze the structure of compensation packages awarded in the United Kingdom compared to their U.S. counterparts. I consider the asymmetric relationship between CEO pay and firm performance in the U.S. and test for similar relations in the U.K. My findings confirm that asymmetry exists in the U.S. in that pay is more strongly associated with upside risk than downside risk. In contrast, U.K. CEO pay is more symmetrically associated with risk. Therefore, while U.S. CEOs face greater risk as a result of compensation with more equity-based pay, their pay to performance is asymmetrical. This suggests an additional component that risk-based arguments must consider before concluding that higher pay in the U.S. is structural and, thus, rational. Finally, in Chapter Three, I examine the effect of executive wealth on accounting quality. Results indicate that firms with wealthier CEOs are significantly more likely to restate earnings. To some extent this effect may be mitigated by compensation committees through the use of unvested compensation components, but this reduction is minimal. Firms with wealthier CEOs also exhibit greater levels of earnings management. Consistent with SEC auditors being aware of this, firms with wealthier CEOs are more likely to face an enforcement action, suggesting that these firms are both targeted and, ultimately, found in violation of accounting requirements. Chief Financial Officers' wealth shows a similar (and even stronger) relationship, increasing the likelihood of an earnings restatement as well as the magnitude of earnings management, but SEC enforcement actions do not reflect this relationship. My results suggest that SEC auditors may be able to improve governance by targeting firms that employ wealthy CFOs, and particularly those with recent large gains.
Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun
Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by . This book was released on 2009 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. We examine how the opportunity to manipulate affects the optimal pay contract, and establish necessary and sufficient conditions under which earnings management occurs. Our model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations.
Book Synopsis Three Essays on Executive Compensation by : Moritz Heimes
Download or read book Three Essays on Executive Compensation written by Moritz Heimes and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Executive Compensation by : Zenu Sharma
Download or read book Three Essays in Executive Compensation written by Zenu Sharma and published by . This book was released on 2009 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on the Regulation of Executive Compensation by : Anamarija Delic
Download or read book Three Essays on the Regulation of Executive Compensation written by Anamarija Delic and published by . This book was released on 2024 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Executive Compensation by : Robert R. Johnson
Download or read book Three Essays on Executive Compensation written by Robert R. Johnson and published by . This book was released on 1988 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Executive Compensation and Corporate Governance by : Swarnodeep Homroy
Download or read book Three Essays in Executive Compensation and Corporate Governance written by Swarnodeep Homroy and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Executive Compensation by : Friedrich Kley
Download or read book Executive Compensation written by Friedrich Kley and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Executive Compensation, Mergers and Acquisitions, and Index Changes by : Jie Cai
Download or read book Three Essays on Executive Compensation, Mergers and Acquisitions, and Index Changes written by Jie Cai and published by . This book was released on 2005 with total page 274 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on the Monitoring Role of Financial Analysts by : Zhongwei Huang
Download or read book Three Essays on the Monitoring Role of Financial Analysts written by Zhongwei Huang and published by . This book was released on 2015 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three chapters that present three standalone essays on the monitoring role of financial analysts. Chapter 1 investigates the monitoring role of financial analysts in the financial reporting process by examining the informativeness and monitoring effect of their written comments on earnings quality. I find that these comments have incremental predictability with respect to future accounting restatements, and convey information to investors beyond that in the earnings forecasts, stock ratings, price targets, and other qualitative text in analyst reports. Further analyses suggest that the market's reaction to these comments is primarily driven by negative comments and comments written with certainty. In addition, controlling for accrual reversals, I find that firms significantly reduce the level of accruals-based earnings management after receiving negative comments, and this reduction is not accompanied by an increase in real activities management. Overall, the first chapter provides direct evidence on analysts' monitoring role in financial reporting. Chapter 2 examines whether and how analysts' monitoring of the financial reporting process alleviates a well-known agency problem in which a manager inflates her compensation by manipulating earnings. I argue that analysts' monitoring reduces a manager's ability to conceal earnings management from directors, thus facilitating directors' adjustment of executive compensation in the presence of earnings management. Consistent with this argument, I find that earnings carry a lower weight in the determination of CEO compensation in firms that are criticized by analysts regarding earnings quality, but only when directors are likely to be aware of the critical analyst reports. The main findings are robust to matching on performance and controlling for firm-fixed effects and are not driven by other text in the analyst reports. Additional analyses suggest that the weight placed on earnings decreases as the actual accruals deviate from analysts' accruals forecasts. Overall, the second chapter emphasizes analysts' monitoring role in alleviating managerial rent extraction in executive compensation. Chapter 3 provides evidence on the impact of recent analyst independence reforms (the National Association of Securities Dealers [NASD] Rule 2711 and the companion New York Stock Exchange [NYSE] Rule 472 Amendment, and the Global Settlement) on analysts' monitoring role in the financial reporting process. The NASD Rule 2711 requires brokerage firms to structurally separate investment banking from equity research; meanwhile, the Global Settlement mandates the participating banks to fund independent research firms to the amount of 432.5 million dollars from 2004 to 2009. I find evidence consistent with an increase in analysts' monitoring effectiveness following the reforms. Further analyses suggest that this increase is primarily driven by the Global Settlement, rather than by the adoption of NASD Rule 2711. The evidence is robust to a difference-in-difference specification with Canadian firms as the control group. Moreover, I document a reversal of the increase in monitoring effectiveness following the end of the Global Settlement's five-year funding. Overall, the third chapter highlights the interaction between the monitoring role of financial analysts and the regulatory environment.
Book Synopsis Executive Compensation and Financial Accounting by : David Aboody
Download or read book Executive Compensation and Financial Accounting written by David Aboody and published by Now Publishers Inc. This book was released on 2010 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive Compensation and Financial Accounting provides research perspectives on the interface between financial reporting and disclosure policies and executive compensation. In particular, it focuses on two important dimensions: - the effects of compensation-based incentives on executives' financial accounting and disclosure choices, and - the role of financial reporting and income tax regulations in shaping executive compensation practices. Executive Compensation and Financial Accounting examines the key dimensions of the relation between financial accounting and executive compensation. Specifically, the authors examine the extent to which compensation plans create incentives for executives to make particular financial reporting and disclosure choices. They also examine the extent to which accounting regulation creates incentives for firms to design particular compensation plans for their executives.
Book Synopsis Is There an Incentive to Manage Earnings? by : Lorraine Bracken
Download or read book Is There an Incentive to Manage Earnings? written by Lorraine Bracken and published by . This book was released on 2006 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Executive Compensation by : Jinsha Zhao
Download or read book Three Essays in Executive Compensation written by Jinsha Zhao and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management and Executive Compensation by : Ronald E. Shrieves
Download or read book Earnings Management and Executive Compensation written by Ronald E. Shrieves and published by . This book was released on 2002 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present and test hypotheses about how the components of compensation influence earnings management behavior. Hypotheses are based, in part, on the observation that discretion over accounting accruals gives managers a potentially valuable timing option that will lead to strategies for maximizing their compensation. Our empirical analysis shows that earnings management intensity, as measured by the absolute value of discretionary current accruals scaled by asset size, is related to managerial compensation contract design. We find the amounts of stock options and bonuses, and the incentive intensity of stock options, are positively related to earnings management intensity, whereas salaries are negatively related. Results do not reliably support either positive or negative effects of long-term incentive plans or restricted stock compensation on earnings management intensity, aside from the incentive intensity effect of restricted stock. We show that magnitudes of the effects of some compensation variables on earnings management intensity are conditional on proximity of premanaged earnings to specified targets. The importance of our findings is the strong evidence they provide that compensation contract design does influence earnings management, and that the influences of the various compensation components appear to be largely predictable on a presumption that (at least some) managers behave opportunistically.
