Accounting Papers

Document Type

Journal Article

Date of this Version

5-2010

Publication Source

Journal of Accounting Research

Volume

48

Issue

2

Start Page

225

Last Page

271

DOI

10.1111/j.1475-679X.2009.00361.x

Abstract

This study examines whether Chief Executive Officer (CEO) equity-based holdings and compensation provide incentives to manipulate accounting reports. While several prior studies have examined this important question, the empirical evidence is mixed and the existence of a link between CEO equity incentives and accounting irregularities remains an open question. Because inferences from prior studies may be confounded by assumptions inherent in research design choices, we use propensity-score matching and assess hidden (omitted variable) bias within a broader sample. In contrast to most prior research, we do not find evidence of a positive association between CEO equity incentives and accounting irregularities after matching CEOs on the observable characteristics of their contracting environments. Instead, we find some evidence that accounting irregularities occur less frequently at firms where CEOs have relatively higher levels of equity incentives.

Copyright/Permission Statement

This is the peer reviewed version of the following article: ARMSTRONG, C. S., JAGOLINZER, A. D. and LARCKER, D. F. (2010), Chief Executive Officer Equity Incentives and Accounting Irregularities. Journal of Accounting Research, 48: 225–271., which has been published in final form at http://dx.doi.org/10.1111/j.1475-679X.2009.00361.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms.

Keywords

equity incentives, accounting restatements, propensity score matching

Included in

Accounting Commons

Share

COinS
 

Date Posted: 27 November 2017

This document has been peer reviewed.