Rank-and-file accounting employee compensation and financial reporting quality

• 成果类型: Article
• 署名作者: Armstrong, Christopher S.; Kepler, John D.; Larcker, David F.; Shi, Shawn X.
• 署名单位: Stanford University; University of Washington
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2024.101672
• 发表日期: 2024
• 关键词: earnings management; equity incentives; Sarbanes-Oxley; MARKET; wages; LABOR; accruals; real; CONSEQUENCES; determinants

摘要

We use a proprietary database with detailed, employee-specific compensation contract information for rank-and-file corporate accountants who are directly involved in the financial reporting process to assess their influence on their firms' financial reporting quality. Theory predicts that paying above-market wages can both attract employees with more human capital and subsequently encourage better performance. Consistent with audit committees structuring accountants' compensation to mitigate financial misreporting that might otherwise occur, we find that firms with relatively well-paid accountants tend to issue higher-quality financial reports. Moreover, this relationship is more pronounced when firms' senior executives have stronger contractual incentives to misreport and when the audit committee is more independent from management.