Why do corporate managers misstate financial statements? The role of option compensation and other factors

• 成果类型: Article
• 署名作者: Efendi, Jap; Srivastava, Anup; Swanson, Edward P.
• 署名单位: Texas A&M University System; Texas A&M University College Station; Mays Business School; California State University System; California Polytechnic State University San Luis Obispo
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2006.05.009
• 发表日期: 2007
• 页码: 667-708
• 关键词: restatements; Stock options; Executive compensation; Agency theory

摘要

We investigate the incentives that led to the rash of restated financial statements at the end of the 1990s market bubble. We find that the likelihood of a misstated financial statement increases greatly when the CEO has very sizable holdings of in-the-money stock options. Misstatements are also more likely for firms that are constrained by an interest-coverage debt covenant, that raise new debt or equity capital, or that have a CEO who serves as board chair. Our results indicate that agency costs increased [Jensen, M.C., 2005a, Agency costs of overvalued equity. Financial Management 34, 5-19] as substantially overvalued equity caused managers to take actions to support the stock price. (c) 2007 Elsevier B.V. All rights reserved.