CEO Compensation Risk and Timely Loss Recognition | |
Brockman, Paul1; Ma, Tao2; Ye, Jianfang3 | |
刊名 | JOURNAL OF BUSINESS FINANCE & ACCOUNTING |
2015 | |
卷号 | 42期号:1-2页码:204-236 |
关键词 | CEO compensation risk timely loss recognition accounting conservatism asset substitution |
ISSN号 | 0306-686X |
DOI | 10.1111/jbfa.12100 |
英文摘要 | Prior studies demonstrate that high CEO compensation risk encourages managers to engage in risk-seeking behavior, thus intensifying agency conflicts between creditors and borrowers. We argue and document that accounting conservatism plays an important role in mitigating debt holder and shareholder conflicts over asset substitution arising from high CEO compensation risk. Our empirical results show that firms with high CEO compensation risk tend to use more timely loss recognition and this positive relationship is more pronounced for firms with high leverage. Additional results show that the positive relationship between CEO compensation risk and borrowing costs is reduced for firms using timely loss recognition, suggesting that creditors perceive timely loss recognition as a risk-reducing mechanism. Using the passage of FAS 123R as a quasi-natural experiment on managerial compensation risk, we find a significant reduction in the use of timely loss recognition for firms experiencing a decrease in CEO compensation risk after the passage of FAS 123R. Lastly, we show that timely loss recognition is positively associated only with the compensation risk of the firm's primary decision maker (i.e., its CEO) and not with the compensation risk of subordinates. |
WOS研究方向 | Business & Economics |
语种 | 英语 |
出版者 | WILEY-BLACKWELL |
WOS记录号 | WOS:000350355000007 |
内容类型 | 期刊论文 |
源URL | [http://10.2.47.112/handle/2XS4QKH4/1622] |
专题 | 上海财经大学 |
通讯作者 | Ye, Jianfang |
作者单位 | 1.Lehigh Univ, Coll Business & Econ, Bethlehem, PA 18015 USA; 2.Univ S Carolina, Darla Moore Sch Business, Columbia, SC 29208 USA; 3.Shanghai Univ Finance & Econ, Inst Accounting & Finance, Sch Accountancy, Shanghai, Peoples R China |
推荐引用方式 GB/T 7714 | Brockman, Paul,Ma, Tao,Ye, Jianfang. CEO Compensation Risk and Timely Loss Recognition[J]. JOURNAL OF BUSINESS FINANCE & ACCOUNTING,2015,42(1-2):204-236. |
APA | Brockman, Paul,Ma, Tao,&Ye, Jianfang.(2015).CEO Compensation Risk and Timely Loss Recognition.JOURNAL OF BUSINESS FINANCE & ACCOUNTING,42(1-2),204-236. |
MLA | Brockman, Paul,et al."CEO Compensation Risk and Timely Loss Recognition".JOURNAL OF BUSINESS FINANCE & ACCOUNTING 42.1-2(2015):204-236. |
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