Substitution between Real and Accruals-Based Earnings Management after Voluntary Adoption of Compensation Clawback Provisions

@article{Chan2015SubstitutionBR,
  title={Substitution between Real and Accruals-Based Earnings Management after Voluntary Adoption of Compensation Clawback Provisions},
  author={Lilian H. Chan and K. Chen and Tai-Yuan Chen and Y. Yu},
  journal={The Accounting Review},
  year={2015},
  volume={90},
  pages={147-174}
}
  • Lilian H. Chan, K. Chen, +1 author Y. Yu
  • Published 2015
  • Economics
  • The Accounting Review
  • ABSTRACT: To deter financial misstatements, many companies have recently adopted compensation recovery policies—commonly known as “clawbacks”—that authorize the board to recoup compensation paid to executives based on misstated financial reports. Clawbacks have been shown to reduce financial misstatements and increase investors' confidence on earnings information. We show that the benefits come with an unintended consequence of certain firms substituting for accruals management with real… CONTINUE READING

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