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Chief Financial Officers’ Short- and Long-term Incentive-based Compensation and Earnings Management

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  • Sarowar Hossain
  • Gary S. Monroe

Abstract

type="main"> This study examines the association between chief financial officers’ (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. STUDY provides evidence that the earnings management behaviour of CFOs is associated with type of CFO compensation.

Suggested Citation

  • Sarowar Hossain & Gary S. Monroe, 2015. "Chief Financial Officers’ Short- and Long-term Incentive-based Compensation and Earnings Management," Australian Accounting Review, CPA Australia, vol. 25(3), pages 279-291, September.
    • Handle: RePEc:bla:ausact:v:25:y:2015:i:3:p:279-291
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    File URL: http://hdl.handle.net/10.1111/auar.12059
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    2. Junqin Huang & Youliang Liao & Bin Lin & Lawrence Loh, 2022. "Supporter or Supervisor? The Role of Chief Financial Officers in Corporate Innovation," Sustainability, MDPI, vol. 14(15), pages 1-18, August.
    3. Naz Sayari & Bill Marcum, 2018. "Do US Corporate Governance Standards Effectively Discourage Risk in the Emerging Markets?," Australian Accounting Review, CPA Australia, vol. 28(2), pages 167-185, June.

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