انگیزه های جبران خسارت مدیر ارشد مالی
Abstract
1. Introduction
2. Literature review
3. Hypotheses development
4. Research design
5. Sample
6. Empirical results
7. Conclusion
Data availability
Appendix A. Variable definitions
References
Abstract
We investigate whether CFO debt-like compensation incentives and their alignment with CEO debt-like compensation incentives are associated with financial reporting quality. He (2015) finds that CEO debt-like compensation incentives are associated with higher financial reporting quality. Consistent with agency theory, we extend He (2015) by considering CFO debt-like compensation incentives. Overall, we find that CFO debt-like compensation incentives are associated with better financial reporting quality while controlling for CEO debtlike compensation incentives. These effects are present when the CEO and CFO compensation incentives are aligned with the same party. Further, the CFO effect dominates that of the CEO when examining discretionary accruals, and complements the CEO effect for accrual quality. However, we are unable to find any evidence of an incremental joint effect from the alignment of the CEO and CFO debt-like compensation incentives.
Introduction
We investigate whether CFO debt-like compensation incentives and their alignment with that of the CEO are associated with financial reporting quality. Agency theory suggests that managers’ equity (inside debt) holdings can align managers’ actions with shareholders’ (debtholders’) interests (Jensen & Meckling, 1976). Prior literature focuses on the role of individual managers’ equity-based compensation incentives and, more recently, CEO’s debt-like compensation incentives on financial reporting quality (e.g., Armstrong, Jagolinzer, & Larcker, 2010; Cheng & Warfield, 2005; Feng, Ge, Luo, & Shevlin, 2011; He, 2015). These studies document a negative (positive) relationship between CEO equity-based (debt-like) compensation and financial reporting quality. However, both the CEO and CFO of U.S. public firms are responsible for financial statement quality. While prior research shows the CFO equity incentives are associated with poorer financial statement quality, we extend this research by examining whether CFO debt-like incentives affect financial reporting quality. We further examine whether there is a joint effect when the CEO and CFO debt-like compensation incentives are aligned. Firms provide their executives incentive plans that are aligned with either shareholders or debtholders. Alignment with debtholders provides executives incentives to reduce information asymmetry and enhance financial reporting quality. He (2015) and Dhole, Manchiraiu, and Suk (2016) find evidence consistent with this expectation using CEO debt-like compensation incentives. We expect a similar relationship to hold for CFO debt-like compensation incentives because the CFO has a greater opportunity to influence financial reporting quality.