1 / 8

Article Review_CEO incentives and earnings management

The authors establish that majority of accounting research focuses on bonus-linked targets and little is known about the role of accrual-based measures thus focuses on the latter.

noahjones6991
Télécharger la présentation

Article Review_CEO incentives and earnings management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Article Review(Case Study) Company Name: Home Of Dissertations Website: https://www.dissertationhomework.com Contact Number: +44 7842798340 CONNECTNOW

  2. Article Review: CEO incentives and earnings management Group Members

  3. Aim and research question Aim of the research • To is establish the effect of accruals on income in earnings management. Research Question • Does increasing use of accruals increase stock-based CEO compensation?

  4. Motivation of the Research • The research is motivated by a gap in the accounting literature • The authors establish that majority of accounting research focuses on bonus-linked targets and little is known about the role of accrual-based measures thus focuses on the latter.

  5. Theoretical Framework • Previous research show that accruals policies of managers are related to the nonlinear incentives inherent in their bonus contracts. • The authors are also cognizant that managers manipulate earnings to game bonus schemes thus they have the ability to game the capital markets. • The authors argue that the market seem to have consistently overestimated the persistence of the accruals components of earnings thus overpricing them • The authors also acknowledge that managers manipulate earnings when they or their firms are selling shares to capital markets. • Previous research also establish that earnings restatements are more common at firms where CEOs have larger options portfolios

  6. Contribution to the existing literature • This research paper complements existing literature by providing evidence that accrual-based measures of earnings management are higher at firms with higher levels of stock-based incentives. • In relation to earnings restatement, the paper complements existing literature by focusing on accrual-based measures of earnings management. • The article concurs with existing literature that periods of high accruals coincide with high levels of CEO option exercises and higher levels of CEO and insider share sales • The paper contributes to existing literature by focusing on a variety of measures of insider option exercises and share sales

  7. Hypothesis • H1: Companies with more incentivized CEOs have higher levels of earnings management

  8. THANKYOU!!! Contactus now Website: https://www.dissertationhomework.com Contact Number: +44 7842798340

More Related