A perspective on regulatory paradigms: The case of IRS and Sarbanes-Oxley approaches to executive compensation-related regulation

James S. Wallace, Victoria Krivogorsky and Kenneth R. Ferris

Research in Accounting Regulation, 2009, vol. 21, issue 2, 111-117

Abstract: In this paper we explore two regulatory paradigms, with an emphasis on the regulation of executive compensation. An example of the traditional rule-based paradigm is Internal Revenue Code Section 162(m) in which a tax-deductible cap was passed into law to limit executive compensation. We demonstrate that this approach yielded mixed results. While stronger pay/performance sensitivity has been documented, Section 162(m) appears to have actually exacerbated the level of executive compensation. We contrast the rules-based paradigm with an alternative paradigm illustrated by the Sarbanes-Oxley Act in which the US Congress introduced a series of corporate governance initiatives into federal securities law. The transformation of the mode of regulatory intervention as reflected by SOX is shown to be fully consistent with recent changes in the generally accepted conceptual framework for financial reporting.

Keywords: Executive compensation; Employee stock options; IRC Section 162(m); Sarbanes-Oxley Act (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1052045709000502
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reacre:v:21:y:2009:i:2:p:111-117

DOI: 10.1016/j.racreg.2009.08.001

Access Statistics for this article

Research in Accounting Regulation is currently edited by G. Previts

More articles in Research in Accounting Regulation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().