aalto1 untyped-item.component.html
Stock-based CEO compensation and earnings manipulation
Loading...
Files
Aalto login required (access for Aalto Staff only).
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Bachelor's thesis
Electronic archive copy is available locally at the Harald Herlin Learning Centre. The staff of Aalto University has access to the electronic bachelor's theses by logging into Aaltodoc with their personal Aalto user ID. Read more about the availability of the bachelor's theses.
Unless otherwise stated, all rights belong to the author. You may download, display and print this publication for Your own personal use. Commercial use is prohibited.
Authors
Date
Department
Major/Subject
Mcode
Degree programme
Language
en
Pages
25 + 9
Series
Abstract
In this paper, I survey the existing literature on executive pay to study the effects of stock-based CEO compensation on earnings manipulation. I review a principal-agent model as well as a dynamic rational expectations model. The former frames the relationship between CEOs and shareholders, and the latter predicts strategic information disclosure, earnings manipulation, and shareholder misinformation resulting from stock-based CEO compensation. I then compare these theoretical insights with the latest evidence. Although empirical studies generally support the prediction that stock-based CEO compensation incentivizes earnings manipulation, there is no consensus on the specific mechanisms of the effect.