Fair value accounting and gains from asset securitizations: A convenient earnings management tool with compensation side-benefits

• 成果类型: Article
• 署名作者: Dechow, Patricia M.; Myers, Linda A.; Shakespeare, Catherine
• 署名单位: University of California System; University of California Berkeley; University of Arkansas System; University of Arkansas Fayetteville; University of Michigan System; University of Michigan
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.09.006
• 发表日期: 2010
• 关键词: COMMITTEE MEMBERSHIP; performance; BOARD; DIRECTORS; governance; POWER; CEOS

摘要

Accounting rules for valuing retained interest from securitizations require management to make assumptions concerning discount Fates, default rates, and prepayment rates. These assumptions provide management with discretion to determine the gain on sale of the receivables. We investigate whether CEO compensation is less sensitive to Securitization gains than to other earnings components in the presence of proxies for how independent (Outsiders, females, fewer CEO-selected directors) and informed (financial expertise) directors are. Overall, Our results do not Suggest that better monitoring reduces earnings management or CEO pay-sensitivity to reported securitization gains. Our results suggest that CEOs are rewarded for the gains they report and boards do not intervene. (C) 2009 Elsevier B.V. All rights reserved.