Is There a Link between Executive Equity Incentives and Accounting Fraud

By Merle M. Erickson, Michelle Hanlon, Edward L. Maydew. 2006

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View Paper: https://www.semanticscholar.org/paper/3173840483ceb43e46ce4836449e236308e796ac

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Citations in the corpus

Board Committees, CEO Compensation, and Earnings Management (2009, positive): “The presence of these two countervailing forces might explain why the recent study by Erickson, Hanlon, and Maydew (2006) finds no clear evidence of a link between the pay-performance sensitivity of executive compensation contracts and the incidence of accounting fraud.”
How far can we trust earnings numbers? What research tells us about earnings management (2013, background): “Similar to Erickson et al. (2006), they find no evidence of a positive link between equitybased incentives and accounting irregularities.”
Equity Incentives and Corporate Fraud in China (2015, positive): “On the other hand, Erickson et al. (2006) and Armstrong et al. (2010) document no effect of equity incentives on corporate fraud.”
Accounting Fraud, Auditing and the Role of Government Sanctions in China (2015, neutral): “, Loebbecke, Eining, &Willingham, 1989) although other papers fail to find a significant association between growth and misreporting/ fraud (Burns & Kedia, 2006; Erickson et al., 2006).”
The relation between earnings management and financial statement fraud (2011, methodology): “…eight significant predictors, we add five controls that are not examined by Fanning and Cogger (1998): Sales Growth (Beneish, 1999; Erickson et al., 2006), Current Discretionary Accruals (Beneish, 1999), Return on Assets (Brazel et al., 2009; Erickson et al., 2006), Total Assets, and Total Sales.”
CEOS ON THE EDGE: EARNINGS MANIPULATION AND STOCK-BASED INCENTIVE MISALIGNMENT (2008, background): “, Erickson et al., 2006; O’Connor et al., 2006) have indicated that stock options have an inconsistent impact on the likelihood of accounting fraud. For instance, O’Connor et al. (2006) argued that large amounts of CEO stock options are associated with both higher and lower incidences of fraudulent ”
Using Nonfinancial Measures to Assess Fraud Risk (2009, methodology): “…practicing auditors revealed that our matching procedure was more likely to be performed by independent auditors rather than a simple SIC code match.7 7 Prior fraud research has traditionally matched on SIC code, year, and size (e.g., Beasley 1996; Summers and Sweeney 1998; Erickson et al. 2006).”
CEO demographics and accounting fraud: Who is more likely to rationalize illegal acts? (2011, background): “To control for potential underlying industry effects resulting from industry-specific considerations (Erickson et al., 2006), including the possibility that the SEC may at times spotlight a particular industry to investigate, each firm was classified according to industry.”
Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences (2010, background): “However, Erickson et al. (2006) and Armstrong et al. (2010b) do not find a positive association between stock-based incentive compensation and the likelihood of accounting fraud.”
Chief Executive Officer Equity Incentives and Accounting Irregularities (2010, methodology): “Following Erickson, Hanlon, and Maydew (2006), each AAER firm is matched to two firms without an AAER from the same year, two-digit SIC code, and similar total assets.”
Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes Oxley Periods (2008, background): “…Ryan, and Tian, (2005) conclude that only unrestricted stock holdings are associated with the occurrence of accounting fraud, while the stock option grants are not, while Erickson, Hanlon, and Maydew (2006) find no consistent evidence that executive equity incentives are associated with fraud.”