The impact of performance-based compensation on misreporting

• 成果类型: Article
• 署名作者: Burns, N; Kedia, S
• 署名单位: University System of Georgia; University of Georgia; Rutgers University System; Rutgers University New Brunswick; Rutgers University Newark
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2004.12.003
• 发表日期: 2006
• 页码: 35-67
• 关键词: restatements; Misreporting; COMPENSATION; options

摘要

This paper examines the effect of CEO compensation contracts on misreporting. We find that the sensitivity of the CEO's option portfolio to stock price is significantly positively related to the propensity to misreport. We do not find that the sensitivity of other components of CEO compensation, i.e., equity, restricted stock, long-term incentive payouts, and salary plus bonus have any significant impact on the propensity to misreport. Relative to other components of compensation, stock options are associated with stronger incentives to misreport because convexity in CEO wealth introduced by stock options limits the downside risk on detection of the misreporting. (c) 2005 Elsevier B.V. All rights reserved.