Implications of power: When the CEO can pressure the CFO to bias reports

• 成果类型: Article
• 署名作者: Friedman, Henry L.
• 署名单位: University of California System; University of California Los Angeles
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2014.06.004
• 发表日期: 2014
• 关键词: sarbanes-oxley act; incentive contracts; equity incentives; INTERNAL CONTROL; team size; performance; management; RESTATEMENTS; INFORMATION; RISK

摘要

Building on archival, anecdotal, and survey evidence on managers roles in accounting manipulations, I develop an agency model to examine the effects of a CEO's power to pressure a CFO to bias a performance measure, like earnings. This power has implications for incentive compensation, reporting quality, firm value, and information rents. Predictions from the model provide potential explanations for the differing results from recent empirical studies on the impact of regulatory interventions like SOX and the extent to which the CEO's or CFO's incentives significantly impact on earnings management. The model also identifies conditions under which either a powerful or a non-powerful CEO can extract rents, which can help explain mixed empirical results on the association between CEO power and excessive compensation. (C) 2014 Elsevier B.V. All rights reserved.