Accounting Comparability, Conservatism, Executive Compensation-Performance, and Information Quality

Abstract

This paper investigates the relationship between accounting comparability, executive compensation, conditional and unconditional conservatism, and accounting information quality. The findings suggest that conditional conservatism and accounting comparability have a positive and significant impact on executive compensation. Moreover, accrual earnings management can strengthen the relationship between accounting comparability and executive compensation, whereas this is not the case with actual earnings management. Unconditional conservatism, however, does not significantly influence executive compensation. In the end, determining the correlation between earnings management and conservatism reveals that executives use conditional conservatism to perform opportunistic behaviours and gain more compensation. In light of the current results, it is expected that the assimilation of standardisation processes and their use in conjunction with existing features will enhance information quality, greater reliability of financial reports, and protect public interests.