CEOs on the edge: Earnings manipulation and stock-based incentive misalignment

• 成果类型: Article
• 署名作者: Zhang, Xiaomeng; Bartol, Kathryn M.; Smith, Ken G.; Pfarrer, Michael D.; Khanin, Dmitry M.
• 署名单位: American University; University System of Maryland; University of Maryland College Park; University of Denver; California State University System; California State University Fullerton
• 刊物名称: ACADEMY OF MANAGEMENT JOURNAL
• ISSN/ISSBN: 0001-4273
• 发表日期: 2008
• 页码: 241-258
• 关键词: AGENCY-THEORY; executive-compensation; corporate governance; Director turnover; EQUITY OWNERSHIP; prospect-theory; RISK; managerial; performance; management

摘要

Synthesizing agency theory and prospect theory, we examined the effects of stock-based incentives on CEO earnings manipulation behaviors. In analyses of data compiled from the public companies listed in Compustat's Executive Compensation Database and a U.S. General Accounting Office restatements database, we found that CEOs were more likely to manipulate firm earnings when they had more out-of-the-money options and lower stock ownership. Firm performance and CEO tenure interacted with out-of-the-money options and ownership to influence CEO earnings manipulation behaviors. Our findings inform agency-based views by providing evidence that, under certain conditions, stock-based managerial incentives lead to incentive misalignment.