Why do CFOs Become Involved in Material Accounting Manipulations?
Preprint
- 12 May 2010
- preprint
- Published by Elsevier BV in SSRN Electronic Journal
Abstract
This paper examines why CFOs become involved in material accounting manipulations. We find that while CFOs bear substantial legal costs when involved in accounting manipulations, these CFOs have similar equity incentives to the CFOs of matched non-manipulation firms. In contrast, CEOs of manipulation firms have higher equity incentives and more power than CEOs of matched firms. Taken together, our findings are consistent with the explanation that CFOs are involved in material accounting manipulations because they succumb to pressure from CEOs, rather than because they seek immediate personal financial benefit from their equity incentives. AAER content analysis reinforces this conclusion.This publication has 26 references indexed in Scilit:
- Predicting Material Accounting Misstatements*Contemporary Accounting Research, 2011
- Chief Executive Officer Equity Incentives and Accounting IrregularitiesJournal of Accounting Research, 2010
- CEO CentralityPublished by National Bureau of Economic Research ,2007
- CEO incentives and earnings managementJournal of Financial Economics, 2006
- The impact of performance-based compensation on misreportingJournal of Financial Economics, 2006
- Powerful CEOs and Their Impact on Corporate PerformanceThe Review of Financial Studies, 2005
- Equity Incentives and Earnings ManagementThe Accounting Review, 2005
- Private Information, Earnings Manipulations, and Executive Stock-Option ExercisesThe Accounting Review, 2004
- Estimating the Value of Employee Stock Option Portfolios and Their Sensitivities to Price and VolatilityJournal of Accounting Research, 2002
- Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC*Contemporary Accounting Research, 1996