CEO Compensation Risk and Timely Loss Recognition

doi:10.1111/jbfa.12100

CORC > 上海财经大学 > 上海财经大学

	CEO Compensation Risk and Timely Loss Recognition
	Brockman, Paul 1; Ma, Tao 2; Ye, Jianfang 3
刊名	JOURNAL OF BUSINESS FINANCE & ACCOUNTING
	2015
卷号	42 期号:1-2 页码:204-236
关键词	CEO compensation risk timely loss recognition accounting conservatism asset substitution
ISSN号	0306-686X
DOI	10.1111/jbfa.12100
英文摘要	Prior studies demonstrate that high CEO compensation risk encourages managers to engage in risk-seeking behavior, thus intensifying agency conflicts between creditors and borrowers. We argue and document that accounting conservatism plays an important role in mitigating debt holder and shareholder conflicts over asset substitution arising from high CEO compensation risk. Our empirical results show that firms with high CEO compensation risk tend to use more timely loss recognition and this positive relationship is more pronounced for firms with high leverage. Additional results show that the positive relationship between CEO compensation risk and borrowing costs is reduced for firms using timely loss recognition, suggesting that creditors perceive timely loss recognition as a risk-reducing mechanism. Using the passage of FAS 123R as a quasi-natural experiment on managerial compensation risk, we find a significant reduction in the use of timely loss recognition for firms experiencing a decrease in CEO compensation risk after the passage of FAS 123R. Lastly, we show that timely loss recognition is positively associated only with the compensation risk of the firm's primary decision maker (i.e., its CEO) and not with the compensation risk of subordinates.
WOS研究方向	Business & Economics
语种	英语
出版者	WILEY-BLACKWELL
WOS记录号	WOS:000350355000007
内容类型	期刊论文
源URL	[http://10.2.47.112/handle/2XS4QKH4/1622]
专题	上海财经大学
通讯作者	Ye, Jianfang
作者单位	1.Lehigh Univ, Coll Business & Econ, Bethlehem, PA 18015 USA; 2.Univ S Carolina, Darla Moore Sch Business, Columbia, SC 29208 USA; 3.Shanghai Univ Finance & Econ, Inst Accounting & Finance, Sch Accountancy, Shanghai, Peoples R China
推荐引用方式 GB/T 7714	Brockman, Paul,Ma, Tao,Ye, Jianfang. CEO Compensation Risk and Timely Loss Recognition[J]. JOURNAL OF BUSINESS FINANCE & ACCOUNTING,2015,42(1-2):204-236.
APA	Brockman, Paul,Ma, Tao,&Ye, Jianfang.(2015).CEO Compensation Risk and Timely Loss Recognition.JOURNAL OF BUSINESS FINANCE & ACCOUNTING,42(1-2),204-236.
MLA	Brockman, Paul,et al."CEO Compensation Risk and Timely Loss Recognition".JOURNAL OF BUSINESS FINANCE & ACCOUNTING 42.1-2(2015):204-236.