Clawback Provision of SOX, Financial Misstatements, and CEO Compensation Contracts

• Published in: Journal of accounting, auditing & finance Vol. 34; no. 1; pp. 74 - 98
• Main Authors: Natarajan, Ramachandran, Zheng, Kenneth
• Format: Journal Article
• Language: English
• Published: Los Angeles, CA SAGE Publications 01.01.2019; Warren Gorham Lamont
• Subjects: Chief executive officers; Clawback; Compensation; Executive compensation; Forfeitures; Public Company Accounting Reform & Investor Protection Act 2002-US; Wages & salaries; United States > US; financial misstatements; Section 304; clawback provision; CEO compensation contracts; Sarbanes-Oxley Act (SOX)

Section 304 of the Sarbanes-Oxley Act (hereafter, SOX), commonly known as the clawback provision, entitles the Securities and Exchange Commission (SEC) to sue the CEO and CFO in an attempt to recover their incentive compensation based on misstated financial reports. Although a stream of literature i...