Executive compensation structure and earnings management: evidence from Australian listed firms in the period of governance reform

Lan Sun

International Journal of Corporate Governance, 2021, vol. 12, issue 1, 1-35

Abstract: Executive compensation incentive is a key factor in inducing management of earnings in firms. Using a sample of 3,326 firm-year observations covering 2000 to 2006 fiscal years, the analysis shows that in Australia managers who receive higher salary tend to engage in less earnings management whereas managers who receive more incentive payments tend to engage in more earnings management. Moreover, Australian firms are committed to a gradual increase in the incentive payments in responding to the regulation reform known as CLERP 9. Subsequently, executives who receive more option grants are more likely to engage in earnings management. These findings will have implications for regulators who intend to improve both the efficacy of CEO compensation structure and financial reporting quality.

Keywords: earnings management; executive compensation; CLERP 9. (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=117208 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijcgov:v:12:y:2021:i:1:p:1-35

Access Statistics for this article

More articles in International Journal of Corporate Governance from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().