Executive incentive compensation and earnings manipulation in a multi-period setting

This study examines in a multi-period setting how trading of equity securities by managers and the awarding of such securities to managers affects earnings manipulation. The study explores the effect of an executive incentive compensation plan, comprised of bonus and equity holdings, on the reportin...

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Bibliographic Details
Published inJournal of economic behavior & organization Vol. 26; no. 2; pp. 201 - 219
Main Authors Elitzur, R.Ramy, Yaari, Varda
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.03.1995
Elsevier
North-Holland Pub. Co
Elsevier Sequoia S.A
SeriesJournal of Economic Behavior & Organization
Subjects
Compensation plans
Decision making
Earnings
Economic theory
Enterprises
Executive compensation
Incentive plans
Securities
Studies
D99
L51
G12
K22
M41
C73
C72
D82
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Summary:This study examines in a multi-period setting how trading of equity securities by managers and the awarding of such securities to managers affects earnings manipulation. The study explores the effect of an executive incentive compensation plan, comprised of bonus and equity holdings, on the reporting strategy of the manager under different degrees of market efficiency. The findings indicate that insider trading provides an informative signal about the direction of earnings manipulation. Furthermore, the results confirm that the choice of compensation scheme by owners tends to affect earnings manipulation.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0167-2681
1879-1751
DOI:10.1016/0167-2681(94)00019-B