Director Compensation and the Reliability of Accounting Information
This paper studies the effect of incentive-based compensation on directors' monitoring of management. Using total accruals to measure the level of earnings management, I find that director stock option compensation is associated with higher levels of total accruals. I interpret this result to s...
محفوظ في:
| المؤلف الرئيسي: | |
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| التنسيق: | article |
| منشور في: |
2009
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| الوصول للمادة أونلاين: | http://hdl.handle.net/10725/3261 http://dx.doi.org/10.1111/j.1540-6288.2009.00228.x http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6288.2009.00228.x/epdf |
| الوسوم: |
إضافة وسم
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| الملخص: | This paper studies the effect of incentive-based compensation on directors' monitoring of management. Using total accruals to measure the level of earnings management, I find that director stock option compensation is associated with higher levels of total accruals. I interpret this result to suggest that director stock options are more likely to align interests of directors with those of managers and that this convergence of interest manifests in lower transparency and reliability of financial information. The results suggest that director stock option compensation provides incentive for directors to compromise their task in the financial reporting process. |
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