Executive compensation and earnings management: Empirical evidence from Japan

Journal of International Accounting, Auditing and Taxation

Volumn 16, Issue 1, 2007, Pages 1-26

  Shuto, Akinobu ^a  

^a SENSHU UNIVERSITY   (Japan)

Author keywords

Big bath; Discretionary accruals; Earnings management; Executive compensation; Extraordinary items; Income smoothing

Indexed keywords

EID: 33847094120     PISSN: 10619518     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.intaccaudtax.2007.01.004     Document Type: Article

References (42)

1. Abdel-Khalik A.R. The effect of LIFO switching and firm ownership on executives pay. Journal of Accounting Research 23 (1985) 427-447
2. Abdel-Khalik A.R., Chi C., and Ghicas D. Rationality of executive compensation schemes and real accounting changes. Contemporary Accounting Research 4 (1987) 32-60
3. Aoki M. Toward an economic model of the Japanese firm. Journal of Economic Literature 28 (1990) 1-27
4. Baber W.R., Kang S., and Kumar K.R. Accounting earnings and executive compensation: The role of earnings persistence. Journal of Accounting and Economics 25 (1998) 169-193
5. Balsam S. Discretionary accounting choices and CEO compensation. Contemporary Accounting Research 15 (1998) 229-252
6. Burgstahler D., and Dichev I. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 24 (1997) 99-126
7. Dechow P.M. Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics 18 (1994) 3-42
8. Dechow P., Huson H., and Sloan R. The effect of restructuring charges on executives cash compensation. The Accounting Review 69 (1994) 138-156
9. Dechow P.M., Sloan R.G., and Sweeney A.P. Detecting earnings management. The Accounting Review 70 (1995) 193-225
10. Defeo V.J., Lambert R.A., and Larcker D.F. Executive compensation effects of equity-for-debt swaps. The Accounting Review 64 (1989) 201-227
11. Defond M., and Jiambalvo J. Debt covenant violation and manipulation of accruals: Accounting choices in troubled companies. Journal of Accounting and Economics 17 (1994) 145-176
12. Douthett E.B., and Jung L. Japanese corporate groupings (Keiretsu) and the informative ness of earnings. Journal of International Financial Management and Accounting 12 (2001) 135-159
13. Fama F.F., and Macbeth J.D. Risk return and equilibrium: Empirical tests. Journal of Political Economy 81 (1973) 607-636
14. Gaver J.J., and Gaver K.M. The relation between nonrecurring accounting transactions and CEO cash compensation. The Accounting Review 73 (1998) 235-253
15. Gaver J.J., Gaver K.M., and Austin J.R. Additional evidence on bonus plans and income measurement. Journal of Accounting and Economics 17 (1995) 3-28
16. Greene W.H. Econometric analysis. 5th ed. (2003), Prentice Hall
17. Guidry F., Leone A., and Rock S. Earnings-based bonus plans and earnings management by business-unit managers. Journal of Accounting and Economics 26 (1999) 113-142
18. Hausman J.A. Specification tests in econometrics. Enomometrica 46 (1978) 1251-1272
19. Healy G.A., Kang S., and Palepu K.G. The effect of accounting procedure changes on CEOs cash salary and bonus compensation. Journal of Accounting and Economics 9 (1987) 7-34
20. Healy P.M. The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics 7 (1985) 85-107
21. Holthausen R.W., Larcker D.F., and Sloan R.G. Annual bonus schemes and the manipulation of earnings. Journal of Accounting and Economics 19 (1995) 29-74
22. Joh S. Strategic managerial incentive compensation in Japan: Relative performance evaluation and product market collusion. The Review of Economic and Statistics 812 (1999) 303-313
23. Jones J. Earnings management during import relief investigations. Journal of Accounting Research 29 (1991) 193-228
24. Kang J.K., and Shivdasani A. Firm performance, corporate governance, and top executive turnover in Japan. Journal of Financial Economics 38 (1995) 29-58
25. Kang J.K., and Shivdasani A. Corporate restructuring, during performance decline in Japan. Journal of Financial Economics 46 (1997) 29-65
26. Kasznik R. On the association between voluntary disclosure and earnings management. Journal of Accounting Research 37 (1999) 57-81
27. Kaplan S. Top executive rewards and firm performance: A comparison of Japan and the United States. Journal of Political Economy 102 (1994) 510-546
28. Kaplan S., and Minton B. Appointment of outsiders to Japanese boards: Determinants and implications for managers. Journal of Financial Economics 36 (1994) 225-258
29. Kato T. Chief executive compensation and corporate groups in Japan: New evidence from micro data. International Journal of Industrial Organization 15 (1997) 455-467
30. Kay I.T. CEO pay and shareholder value (1998), St. Lucie Press
31. Murphy, K. J. (1998). Executive compensation. Working Paper, University of Southern California.
32. Milgrom P., and Roberts J. Economic, organization, and management (1992), Prentice-Hall, Englewood Cliffs, N.J.
33. Natarajan R. Stewardship value of earnings components: Additional evidence on the determinants of executive compensation. The Accounting Review 71 (1996) 1-22
34. Otomasa S. Cut in bonus and managerial accounting discretion. Accounting 158 (2000) 43-54 in Japanese
35. Subramanyan K.R. The pricing of discretionary accruals. Journal of Accounting and Economics 22 (1996) 249-281
36. Shuto, A. (2002). An empirical investigation of the relative performance evaluation: Evidence from Japan. Research paper. The Institute for Accounting Study Senshu University, No. 6, pp. 1-28 (in Japanese).
37. Shuto, A. (2003). An empirical investigation of the relation between consolidated accounting information and executive compensation: Evidence from Japan. Research paper, The Institute for Accounting Study Senshu University, No. 9, pp. 1-21 (in Japanese).
38. Suda K., and Shuto A. Earnings management to meet earnings benchmarks: Evidence from Japan. In: Neelan M. (Ed). Focus on Finance and Accounting Research (2006), Nova Science Pub Inc.
39. Vuong Q.H. Likelihood ratio for model selection and non-nested hypotheses. Econometrica 57 (1989) 307-333
40. Watts R.L., and Zimmerman J.L. Positive accounting theory (1986), Prentice-Hall, Englewood Cliffs, N.J.
41. Xu P. Wages, bonuses of directors and managerial incentive in Japanese firms. Nihon Keizai Kenkyu 24 (1993) 73-96 in Japanese
42. Xu P. Executive salaries as prizes of tournaments, and executive bonuses as managerial incentive in Japan. Journal of Japanese and International Economic 11 (1997) 319-346