Executive Compensation And Contract-Driven Earnings Management

Lan Sun ()
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Lan Sun: UNE Business School, Faculty of the Professions, University of New England, Australia NSW2351

Asian Academy of Management Journal of Accounting and Finance (AAMJAF), 2012, vol. 8, issue 2, 111–127

Abstract: Earnings management is found to be driven by different managerial incentives. Previous studies have identified that executive compensation contracts create incentives for earnings management. The agency theory and the positive accounting theory provide explanations for contract-driven earnings management. This study links the agency theory and the positive accounting theory and reviews the early executive compensation studies, bonus plan maximisation hypothesis and equity-based compensation. The aim of this study is to shed light in explaining contractual incentives and provide useful information in understanding the executive compensation contract-driven earnings management behaviour.

Keywords: Executive compensation; earnings management; contractual incentives; agency theory; positive accounting theory (search for similar items in EconPapers)
Date: 2012
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