Contrasting Incentives for Earnings Management: Board Activity and Board Remuneration in Spanish Firms

7 Pages Posted: 28 Nov 2020

See all articles by Paolo Saona

Paolo Saona

Saint Louis University

Laura Muro

St. Louis University - Madrid

Ryan McWay

University of Michigan, Institute for Social Research

Mauricio Jara-Bertin

University of Chile - Business School

Date Written: December 1, 2019

Abstract

We analyze the effect board activity and board remuneration has on earnings management (EM). Our results show that more active boards are inefficient in preventing earnings manipulation. Regarding board compensation we find a U-shaped relation indicating that excessive remuneration will lead to more earnings management. Policy recommendations are derived from the findings.

Keywords: Earnings management, board remuneration, corporate governance

JEL Classification: G32

Suggested Citation

Saona, Paolo and Muro, Laura and McWay, Ryan and Jara-Bertin, Mauricio Alejandro, Contrasting Incentives for Earnings Management: Board Activity and Board Remuneration in Spanish Firms (December 1, 2019). Available at SSRN: https://ssrn.com/abstract=3710966 or http://dx.doi.org/10.2139/ssrn.3710966

Paolo Saona (Contact Author)

Saint Louis University ( email )

Avidena del Valle, 34 y 28
Madrid, 28003
Spain
620364817 (Phone)

Laura Muro

St. Louis University - Madrid ( email )

Avenida del Valle 34
Madrid, 28003
Spain

Ryan McWay

University of Michigan, Institute for Social Research ( email )

Ann Arbor, MI 48106-1248
United States

Mauricio Alejandro Jara-Bertin

University of Chile - Business School ( email )

Diagonal Paraguay 257
Santiago, Chile
Chile

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