Incentives to cheat: The influence of executive compensation and firm performance on financial misrepresentation

• 成果类型: Article
• 署名作者: Harris, Jared; Bromiley, Philip
• 署名单位: University of Virginia; University of California System; University of California Irvine
• 刊物名称: ORGANIZATION SCIENCE
• ISSN/ISSBN: 1047-7039
• DOI: 10.1287/orsc.1060.0241
• 发表日期: 2007
• 页码: 350-367
• 关键词: Corporate misconduct; behavioral theory; Executive compensation; Relative performance

摘要

Despite the many undesirable outcomes of corporate misconduct, scholars have an inadequate understanding of corporate misconduct's causes and mechanisms. We extend the behavioral theory of the firm, which traditionally assumes away the possibility of firm impropriety, to develop hypotheses predicting that top management incentive compensation and poor organizational performance relative to aspirations increase the likelihood of financial misrepresentation. Using a sample of financial restatements prompted by accounting irregularities and identified by the U.S. Government Accountability Office, we find empirical support for both incentive and relative performance influences on financial statement misrepresentation.