Executive Compensation Incentives and Earnings Management of Australian Firms

2011 ◽  
Author(s):  
Lan Sun ◽  
Subhrendu Rath
Keyword(s):  
Earnings Management ◽  
Executive Compensation ◽  
Compensation Incentives

The bounded incentive effect of informal institutions

2019 ◽  
Vol 10 (2) ◽  
pp. 207-232
Author(s):  
Yilin Zhang ◽  
Dongling Cai ◽  
Fansheng Jia ◽  
Guangzhong Li
Keyword(s):  
Executive Compensation ◽  
Formal System ◽  
Governance Mechanism ◽  
Content Type ◽  
The Sustainable Development ◽  
Informal System ◽  
Corporate Governance Mechanism ◽  
New Perspective ◽  
Compensation Incentives

Purpose This paper aims to mainly investigate the role of trust, which is an important informal system, in executive compensation incentives. Design/methodology/approach Using the data of Chinese A-share private enterprises from 2003 to 2014, the paper estimates the effect that trust has on executive compensation incentives. Findings Results indicate that trust can significantly enhance the effectiveness of executive compensation incentives. Furthermore, the better the regional trust environment in which companies are located, the more pronounced the effect is. In particular, the effect of trust on executive compensation incentives is only significant when the formal legal system is immature. As companies continue to grow and develop and the formal system becomes perfect, the role of trust weakens. The formal system, including the corporate governance mechanism and perfect legislation, then becomes the key to promoting executive compensation incentives. Practical implications This paper provides evidence of the significance of both informal and formal systems. It not only emphasises the important role that the informal system has played in “the mystery of China’s economic growth” but also supports the “ruling the country by law” strategy for the sustainable development of China’s economy. Originality/value This paper reveals the relationship between the formal and informal systems, which provides a new perspective on and empirical evidence for the determinants of executive compensation incentives, and it also finds an explanation for the rapid growth of China’s economic development.

scholarly journals CSR-Contingent Executive Compensation Incentive and Earnings Management

2019 ◽  
Vol 11 (12) ◽  
pp. 3421 ◽  
Author(s):  
Zhichuan (Frank) Li ◽  
Caleb Thibodeau
Keyword(s):  
Earnings Management ◽  
Executive Compensation ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Compensation Contracts ◽  
Corporate Executives ◽  
Incentive Effects ◽  
Public Pressure ◽  
Contingent Compensation ◽  
Corporate Social

This paper empirically studies the connection between earnings management and corporate social performance, conditional on the existence of CSR-contingent executive compensation contracts, an emerging practice to link executive compensation to corporate social performance. We find that executives are more likely to manipulate earnings to achieve their personal compensation goals when CSR rating is low, as well as their CSR-contingent compensation. Because of public pressure on their excessive total compensation, corporate executives see no need to manipulate earnings to increase compensation when their CSR-contingent compensation is already high. Our results suggest that earnings management and CSR-contingent compensation are substitute tools to serve the interests of executives, which is an agency problem that was never previously studied. Additionally, we explore how managerial characteristics affect earnings management, driven by the incentive effects of CSR-linked compensation.

scholarly journals The Influence of Executive Compensation Gap on Earnings Management from the Perspective of Media Supervision: Evidence from China

2021 ◽  
Vol 2021 ◽  
pp. 1-10
Author(s):  
Ye Wang ◽  
Fusheng Wang ◽  
Shiyu Liu
Keyword(s):  
High Pressure ◽  
Earnings Management ◽  
Executive Compensation ◽  
Financial Indicators ◽  
Management Behavior ◽  
Media Attention ◽  
Current Period ◽  
Media Supervision ◽  
Compensation Gap ◽  
Accrued Earnings

To pursue higher compensation, the agent’s earnings management behavior may damage the principal’s interests. Can managers whose compensation reaches the expected level seek benefits for the company through earnings management? This study takes China’s A-share listed companies from 2014 to 2018 as samples. The conclusions show that managers with higher compensation levels will carry out earnings management in favor of the company while taking their own interests into consideration. For companies with stronger profitability, the higher the managers’ compensation is, the more they are inclined to reduce accrued earnings in the current period to further reduce taxes and fees. For companies with weaker profitability, managers with higher compensation tend to choose to increase real earnings to further optimize financial indicators. It has been found through further research that high pressure generated by media attention can make well-paid executives restrain the above earnings management behavior, which serves as an effective method to protect investors’ rights and interests.

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