RT Article
T1 What Does CEOs’ Pay-for-Performance Reveal About Shareholders’ Attitude Toward Earnings Overstatements?
JF Journal of business ethics
VO 146
IS 2
SP 419
OP 450
A1 Guthrie, Katherine
A1 Kwon, Illoong
A1 Sokolowsky, Jan
A2 Kwon, Illoong
A2 Sokolowsky, Jan
LA English
YR 2017
UL https://ixtheo.de/Record/1785662910
AB If overstatements were a symptom of the agency conflict, pay-for-performance sensitivities should have increased in response to the additional penalties for misreporting imposed by SOX. Our finding of their decrease is inconsistent with the view that overstatements were an unintended consequence of incentive pay prior to 2002. To corroborate our interpretation, we show that (i) CEO pay-for-performance sensitivities are higher among firms whose shareholders stand to benefit from overstatements; (ii) this cross-sectional relationship weakens significantly after SOX; and (iii) the within-firm decrease in pay-for-performance sensitivity is most pronounced among firms with high pre-SOX shareholder benefits from overstatements.
K1 M52
K1 M43
K1 M41
K1 L21
K1 J33
K1 G34
K1 G32
K1 Shareholder myopia
K1 Sarbanes–Oxley Act
K1 Pay-for-performance sensitivity
K1 Firm objectives
K1 Earnings management
K1 CEO incentive pay
DO 10.1007/s10551-015-2891-y