Author:
Assenso-Okofo Oheneba,Ali Muhammad Jahangir,Ahmed Kamran
Abstract
Purpose
This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals.
Design/methodology/approach
The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust.
Findings
The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC.
Practical implications
The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances.
Originality/value
So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.
Subject
General Economics, Econometrics and Finance,Accounting,Management Information Systems
Reference82 articles.
1. Earnings management in Malaysian IPOs: the East Asian crisis, ownership control, and post-IPO performance;The International Journal of Accounting,2011
2. Earnings management and equity incentives: evidence from the European banking industry;International Journal of Accounting and Information Management,2019
3. The effect of say on pay on CEO compensation and spill-over effect on corporate cash holdings: evidence from Australia;Pacific-Basin Finance Journal,2019
4. Paying for long-term performance;University of Pennsylvania Law Review,2010
Cited by
12 articles.
订阅此论文施引文献
订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献