Earnings Based Bonus Plans And Earnings Management By Business Unit Managers
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| Author | : Flora Guidry |
| Publisher | : |
| Total Pages | : |
| Release | : 1997 |
| Genre | : |
| ISBN | : |
This study tests the Fixed-Target Hypothesis (Healy, 1985), wherein it is hypothesized that managers make discretionary accrual decisions to maximize their short-term bonuses. We conduct our analysis using business unit-level rather than firm-level data. In our setting, business unit manager incentive compensation is based solely on business unit earnings. Therefore, the potentially confounding effects of long-term performance and stock-based incentive compensation present in previous research are absent. Using multiple measures of discretionary accruals, we find evidence consistent with Healy (1985) in that managers with bonus- related incentives to make income-increasing discretionary accruals do so relative to managers with incentives to use accrual discretion to decrease earnings. To the extent that external financial reporting represents an aggregation of business unit financial reports, our results highlight the importance of internal contracting as a determinant of external reporting, as conjectured by Watts and Zimmerman (1990).
| Author | : Joshua Ronen |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 587 |
| Release | : 2008 |
| Genre | : Business & Economics |
| ISBN | : 0387257691 |
This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
| Author | : Vieira, Elisabete S. |
| Publisher | : IGI Global |
| Total Pages | : 433 |
| Release | : 2021-02-12 |
| Genre | : Business & Economics |
| ISBN | : 1799875989 |
New trends are emerging regarding earnings management and corporate governance showing similarities and striking differences in the practices of different countries and economies. These new trends currently shape the field of modern corporate governance with crucial issues being looked at in governance law and practices, accounting systems, earnings quality and management, stakeholder involvement, and more. In order to advance these new avenues in corporate governance, research looks at accounting policies firms use in different opportunistic circumstances in order to manage earnings, the corporate governance practices in different countries, firm performance, and other dimensions of companies. The understanding of these topics is beneficial in understanding the current state of different types of firms and their practices in modern times. Comparative Research on Earnings Management, Corporate Governance, and Economic Value is focused on the investigation of key challenges and perspectives of corporate governance and earnings management and outlines possible scenarios of its development. The chapters explore this new avenue of research and cover theoretical, empirical, and experimental studies related to different themes in the global context of earnings management and corporate governance. This book is ideal for economists, businesses, managers, accountants, practitioners, stakeholders, researchers, academicians, and students who are interested in the current issues and advancements in corporate governance and earnings management.
| Author | : Ademola Akinteye |
| Publisher | : GRIN Verlag |
| Total Pages | : 862 |
| Release | : 2019-12-09 |
| Genre | : Business & Economics |
| ISBN | : 334607871X |
Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measured by the reporting line of the holder of this role. In some sectors, the ingredients of strong corporate governance were missing thus suggesting a need for a more stricter regime of corporate governance to be implemented in these corporations.
| Author | : Bruno Maria Franceschetti |
| Publisher | : Springer |
| Total Pages | : 168 |
| Release | : 2017-08-03 |
| Genre | : Business & Economics |
| ISBN | : 3319541218 |
This book approaches the question of the relation between financial crises and earnings management from two philosophical perspectives: positivism and critical realism. The results obtained using the positivist approach indicate that financial crises tend to have no consistent effect on earnings quality since managers’ earnings behavior does not differ from the pre-crisis to the crisis period. The author accordingly argues against the existence of a causal law based on a constant conjunction model (i.e., whenever a financial crisis happens, earnings management occurs) and concludes that financial crises cannot be seen as the cause of earnings management. The critical realism perspective, on the other hand, casts light on managers’ reasons for acting like an earnings manager; in conjunction with the more traditional positivist approach, it assists in refuting the idea of financial crises as a generative mechanism for earnings management. The author concludes by exploring other structures at work that might be responsible for earnings management. This book will be of interest to both academics and a wide range of professionals.
| Author | : Farinha, Luís |
| Publisher | : IGI Global |
| Total Pages | : 487 |
| Release | : 2020-03-06 |
| Genre | : Business & Economics |
| ISBN | : 1799821374 |
The competitive nature of organizations in today’s globalized world has led to the development of various approaches to increasing profitability and maintaining an advantage over rival companies. As technology continues to be integrated into business practices, specifically in the area of accounting and finance, professionals and educators need to be prepared for advancing economic techniques, and they need to maintain a high level of financial literacy. The Handbook of Research on Accounting and Financial Studies is a pivotal reference source that provides vital research on advanced knowledge and emerging business practices and teaching dynamics in the fields of accounting and finance. While highlighting topics such as cost-benefit analysis, risk management, and corporate governance, this publication explores new initiatives in entrepreneurship and performance management. This book is ideally designed for business managers, consultants, entrepreneurs, auditors, tax practitioners, economists, accountants, academicians, researchers, and students seeking current research on modern advancements and recent findings in accounting and financial studies.
| Author | : Christian Petersen |
| Publisher | : |
| Total Pages | : 11 |
| Release | : 2007 |
| Genre | : |
| ISBN | : |
Bonus plans have become a popular tool for compensating managers and employees. While other accounting studies on bonus plans typically focus on earnings management, for example by examining the association between cash bonuses and stock returns or the incentive for management to manage earnings, our study discusses specific issues that are relevant in designing and understanding bonus plans based on financial performance measures.Bonus contracts should be designed so they align the interest of management and owners. In practice, this is far more difficult than it sounds. We discuss issues that require special attention in preparing bonus contracts: Choice of performance measure(s), accounting issues, link between performance and bonus, and bonus threshold.Our study should be of interest to managers, compensation committees, investors and others interested in bonus plans. A proper bonus plan is essential to ascertain that management compensation is closely linked to management's ability to create value.
| Author | : Luis R. Gomez-Mejia |
| Publisher | : Routledge |
| Total Pages | : 366 |
| Release | : 2014-12-18 |
| Genre | : Business & Economics |
| ISBN | : 1317473957 |
This up-to-date, research-oriented textbook focuses on the relationship between compensation systems and firm overall performance. In contrast to more traditional compensation texts, it provides a strategic perspective to compensation administration rather than a functional viewpoint. The text emphasizes the role of managerial pay, its importance, determinants, and impact on organizations. It analyzes recent topics in executive compensation, such as pay in high technology firms, managerial risk taking, rewards in family companies, and the link between compensation and social responsibility and ethical issues, among others. The authors provide a thorough and comprehensive review of the vast literatures relevant to compensation and revisit debates grounded in different theoretical perspectives. They provide insights from disciplines as diverse as management, economics, sociology, and psychology, and amplify previous discussions with the latest empirical findings on compensation, its dynamics, and its contribution to firm overall performance.
| Author | : Hadrian Geri Djajadikerta |
| Publisher | : Springer |
| Total Pages | : 351 |
| Release | : 2015-07-01 |
| Genre | : Business & Economics |
| ISBN | : 9812874992 |
This book offers a collection of studies on regional integration and the dynamic business environment in East Asia. The papers included, originally presented at the 2014 Asia Pacific Business Conference on "Free Trade Agreements and Regional Integration in East Asia," examine the challenges and dynamics in the increasingly integrated East Asian markets and outline a new paradigm for doing international business in the region. The papers address diverse areas related to regional integration, financial markets, investment, trade and capital flow, sustainability, accounting and auditing issues, exchange rates, strategies and the regional business environment. The book provides a valuable resource for practitioners, policy-makers and students who are interested in understanding the vibrant aspects of business in today’s East Asia.
| Author | : Paul M. Healy |
| Publisher | : Createspace Independent Publishing Platform |
| Total Pages | : 86 |
| Release | : 2017-08-08 |
| Genre | : |
| ISBN | : 9781974353040 |
Earnings-based bonus schemes are a popular means of rewarding corporate executives. Fox (1980) reports that In 1980 ninety percent of the one thousand largest U.S. manufacturing corporations used a bonus plan based on accounting earnings to remunerate managers. This paper tests the association between managers' accrual and accounting procedure decisions and their Income-reporting Incentives under these plans. Earlier studies testing this relation postulate that executives rewarded by bonus schemes select Income-Increasing accounting procedures to maximize their bonus compensation. Their empirical results are conflicting. These tests, however, have several problems. First, they Ignore the earnings' definitions of the plans; earnings are often defined so that certain accounting decisions do not affect bonuses.
