Corporate governance and pay-for-performance: The impact of earnings management

• 成果类型: Article
• 署名作者: Cornett, Marcia Millon; Marcus, Alan J.; Tehranian, Hassan
• 署名单位: Boston College; Southern Illinois University System; Southern Illinois University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2007.03.003
• 发表日期: 2008
• 页码: 357-373
• 关键词: CORPORATE GOVERNANCE; earnings management; financial performance; Stock options

摘要

We ask whether the apparent impact of governance structure and incentive-based compensation on firm performance stands up when measured performance is adjusted for the effects of earnings management. Institutional ownership of shares, institutional investor representation on the board of directors, and the presence of independent outside directors on the board all reduce the use of discretionary accruals. These factors largely offset the impact of option compensation, which strongly encourages earnings management. Adjusting for the impact of earnings management substantially increases the measured importance of governance variables and dramatically decreases the impact of incentive-based compensation on corporate performance. (c) 2007 Elsevier B.V. All rights reserved.