The DOI matches its Crossref record; 53 of the 53 references it cites were found in a registry or an index.
Equity Incentives and Earnings Management
Abstract
This paper examines the link between managers' equity incentives—arising from stock-based compensation and stock ownership—and earnings management. We hypothesize that managers with high equity incentives are more likely to sell shares in the future and this motivates these managers to engage in earnings management to increase the value of the shares to be sold. Using stock-based compensation and stock ownership data over the 1993–2000 time period, we document that managers with high equity incentives sell more shares in subsequent periods. As expected, we find that managers with high equity incentives are more likely to report earnings that meet or just beat analysts' forecasts. We also find that managers with consistently high equity incentives are less likely to report large positive earnings surprises. This finding is consistent with the wealth of these managers being more sensitive to future stock performance, which leads to increased reserving of current earnings to avoid future earnings disappointments. Collectively, our results indicate that equity incentives lead to incentives for earnings management.
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Cites
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Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods
Cohen, D. A., Dey, A., & Lys, T. Z. (2008) · The Accounting Review · doi:10.2308/accr.2008.83.3.757 · Cited by 3,078
Evidence on the Trade-Off between Real Activities Manipulation and Accrual-Based Earnings Management
Zang, A. Y. (2012) · The Accounting Review · doi:10.2308/accr-10196 · Cited by 2,291
Are family firms more tax aggressive than non-family firms?
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. (2010) · Journal of Financial Economics · doi:10.1016/j.jfineco.2009.02.003 · Cited by 2,050
Self-citationThe role of information and financial reporting in corporate governance and debt contracting
Armstrong, C. S., Guay, W. R., & Weber, J. P. (2010) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2010.10.001 · Cited by 1,494
Founding Family Ownership and Earnings Quality: founding family ownership
WANG, D. (2006) · Journal of Accounting Research · doi:10.1111/j.1475-679x.2006.00213.x · Cited by 1,121
Metadata
- Authors
- Cheng, Q., & Warfield, T. D.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2005-04-01
- Volume
- 80
- Issue
- 2
- Pages
- 441-476
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W3125843505
- Cited by
- 1,435
- References
- 53
- FWCI
- 163.98
- Type
- journal article
- Language
- en
- Open access
- closed
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Bibliographic data: Semantic Scholar, OpenAlex, Crossref.
Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
