Why Do Corporate Managers Misstate Financial Statements? the Role of Option Compensation and Other Factors

By Jap Efendi, Anup Srivastava, Edward P. Swanson. 2007

929 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/7f467803971a543575f70d3ddd217f1368b8c276

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Citations in the corpus

Inside the 'Black Box' of Sell-Side Financial Analysts (2014, positive): “, recent management turnover, company consistently meets or beats earnings targets, and management wealth is closely tied to stock prices) have relatively strong support in the literature (e.g., Desai et al., 2006; Efendi et al., 2007; Myers et al., 2007).”
Short Sellers and Financial Misconduct (2010, result): “Furthermore, the median value is 15 This finding is consistent with arguments that one reason firms misrepresent their financials is to issue new shares at a favorable price (e.g., see Dechow, Sloan, and Sweeney 1996; Efendi, Srivastava, and Swanson 2007).”
Detecting and Predicting Accounting Irregularities: A Comparison of Commercial and Academic Risk Measures (2011, positive): “Prior research has shown that executive compensation (Efendi et al. 2007) and non-financial measures (Brazel et al.”
Chief Executive Officer Equity Incentives and Accounting Irregularities (2010, background): “Some prior studies provide evidence of a positive association only for certain components of option-related holdings (e.g., Harris and Bromiley, 2006; Burns and Kedia, 2006; Efendi, Srivastava, and Swanson, 2007).”
Corporate Fraud and Managers’ Behavior: Evidence from the Press (2010, background): “Several empirical studies have confirmed the role of stock options as incentives in cases of restatements (Efendi et al., 2007) or securities fraud allegations (Denis et al.”
The effect of CEO inside debt holdings on financial reporting quality (2015, background): “…1986; Healy 1985; Gaver et al. 1995; Holthausen et al. 1995; Guidry et al. 1999; Murphy 2000) and equity incentive (e.g. Aboody and Kasznik 2000; Bartov and Mohanram 2004; Cheng and Warfield 2005; Bergstresser and Philippon 2006; Efendi et al. 2007; Jiang et al. 2009; Armstrong et al. 2013).”
CEO Equity Incentives and Audit Fees (2015, background): “Burns and Kedia (2006) and Efendi et al. (2007) show that CEOs engage in more egregious accounting manipulations, as reflected in a greater likelihood of earnings restatements, when they have greater equity incentives.”
Do Firms Manage Earnings to Meet Dividend Thresholds (2008, positive): “…abnormal discretionary accruals in the context of executive compensation (Healy, 1985; Bergstresser and Philippon, 2006; Burns and Kedia, 2006; Efendi et al., 2007), external financing events (Shivakumar, 2000; Teoh et al., 1998a, b), and other threshold earnings levels (Bergstresser et al.,…”
Tournament Incentives and Corporate Fraud (2015, background): “…find a positive relationship between the sensitivity of a CEO’s equity portfolio to changes in stock price (delta) and earnings management; Burns and Kedia (2006) and Efendi, Srivastava, and Swanson (2007) find a positive relationship between a CEO’s portfolio delta and earnings restatements.”
Earnings Restatements, Changes in CEO Compensation, and Firm Performance (2008, methodology): “However, prior research (e.g., Burns and Kedia 2006; Efendi et al. 2007) uses the year prior to the earliest year restated as the benchmark year when investigating whether restatement firms have higher equity incentives than other firms.”