The impact of accounting comparability on CEO incentive plans in an emerging economy: the moderating role of board independence

Arash Arianpoor and Somaye Efazati

Asian Review of Accounting, 2023, vol. 32, issue 1, 51-69

Abstract: Purpose - The present study investigates the impact of accounting comparability on chief executive officer (CEO) incentive plans and the moderating role of board independence for companies listed in Tehran Stock Exchange (TSE). Design/methodology/approach - The information about 177 companies in 2014–2021 was examined. In this study, equity-based compensation and cash-based compensation were used as the CEO incentive plans. The equity-based compensation was calculated through the ownership of the CEO shares. Findings - The results suggest that the higher accounting comparability increases not only CEO equity-based compensation, but also cash-based compensation. Board independence also strengthens the relationship between accounting comparability and CEO compensation. Hypothesis testing based on robustness checks confirmed these results. Originality/value - The paper is pioneering, to the authors' knowledge, in identifying how board independence moderates the impact of accounting comparability on CEO compensation. The findings provide insights into economic consequences to the firm related to accounting comparability and board monitoring. The results have important practical implications for international investors to evaluate accounting comparability, corporate governance mechanisms and CEO incentives.

Keywords: Accounting comparability; Board independence; Cash-based compensation; CEO incentive plans; Equity-based compensation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-01-2023-0002

DOI: 10.1108/ARA-01-2023-0002

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