Chief Financial Officers’ Short — And Long-Term Incentives Based Compensation and Earnings Management.

Australian Accounting Review (Forthcoming)

Posted: 3 Sep 2015

See all articles by Sarowar Hossain

Sarowar Hossain

University of New South Wales (UNSW)

Gary S. Monroe

University of New South Wales (UNSW) - Australian School of Business

Date Written: September 2, 2015

Abstract

This study examines the associations between the Chief Financial Officer’s (CFOs) short- and long-term compensation and discretionary current and non-current accruals. The CFO’s cash bonus is used as a measure of short-term incentives and shares plus options is used as a measure of long-term incentives. The results show a significant and positive association between CFOs’ short-term compensation and the absolute value of discretionary current accruals. The results also show a significant and positive association between CFOs’ long-term compensation and the absolute value of discretionary non-current accruals. The results provide evidence that the earnings management behaviour of CFOs is associated with the type of CFO compensation.

Keywords: Chief Financial Officer, discretionary current and non-current accruals, short and long-term compensation, bonus, shares and options.

JEL Classification: M12, M42

Suggested Citation

Hossain, Sarowar and Monroe, Gary S., Chief Financial Officers’ Short — And Long-Term Incentives Based Compensation and Earnings Management. (September 2, 2015). Australian Accounting Review (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2655423

Sarowar Hossain (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Gary S. Monroe

University of New South Wales (UNSW) - Australian School of Business ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia
+61293856443 (Phone)

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