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CEO incentives and earnings management

Authors: Bergstresser, Daniel
Philippon, Thomas
Issue Date: Dec-2004
Series/Report no.: FIN-05-007
Abstract: We provide evidence that the use of discretionary accruals to manipulate reported earnings is more pronounced at firms where the CEO’s potential total compensation is more closely tied to the value of stock and option holdings. In addition, during years of high accruals, CEOs exercise unusually large amounts of options and CEOs and other insiders sell large quantities of shares.
Appears in Collections:Finance Working Papers

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