Executive Compensation and Corporate Fraud in China

Conyon, Martin J.; He, Lerong

doi:10.1007/s10551-014-2390-6

Cited by 160 publications

(106 citation statements)

References 74 publications

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“…Our study is related to an earlier study of Inci (2012), which demonstrates that managers with shorter tenure are more likely to use profitable insider trading to compensate for the lower wages. We add to research highlighting the moral hazard problem associated with managerial risk-taking behavior and executive compensation, such as the study of Conyon and He (2016), who document that CEOs receive lower compensation when firms are detected in committing fraud.…”

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confidence: 99%

Do managers act opportunistically towards the end of their career?

Kabir

Veld‐Merkoulova

2018

Journal of International Financial Markets, Institutions and Mo

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As managers approach retirement, their career horizons become shorter and they might start to behave opportunistically by taking a more risk-averse and short-term orientation. Long-term risky investments, such as research and development, can suffer the most from this problem as their payoff comes long after CEOs retire. To mitigate such behavior, most executive compensation contracts include long-term performance incentives. In this study, we hypothesize that long-term debt-like compensation in the form of defined benefit pension can make the career horizon problem more severe. We empirically examine the impact of managerial opportunism, influenced by pension compensation, on the research and development investments. We find that on average UK CEOs do not curtail research and development as their career horizons become shorter. But, the defined-benefit pension component of executive compensation leads CEOs, who are closer to retirement, to decrease R&D investments. Our results imply that executive compensation contracts need to be appropriately adjusted when managers approach retirement.

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confidence: 99%

Do managers act opportunistically towards the end of their career?

Kabir

Veld‐Merkoulova

2018

Journal of International Financial Markets, Institutions and Mo

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“…Conyon and He, 2016 [190] There is a significantly negative correlation between CEO compensation and corporate fraud. The CEO is penalized for fraud by reducing his salary.…”

Section: Author/year Main Contributionmentioning

confidence: 98%

Research Topics in Accounting Fraud in the 21st Century: A State of the Art

2019

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Companies play a role in society that clearly goes beyond mere economic interest. Their contribution to social development and to the sustainability of the territory where they are located seems unquestionable. However, after the great financial scandals of companies such as ENRON, WorldCom or AHOLD, interest groups require accurate and transparent financial information. The development of more demanding financial reporting standards seems, however, not to have been up to scratch, since accounting fraud continues to be detected all over the world. The search, therefore, for possible causes that may induce companies to act unethically was the main motivation behind this research. To do this, a review of the literature in high-impact journals that has dealt with accounting fraud, covering the main lines of research, was carried out. The findings of the literature review highlight the importance of responsible corporate governance and good accounting practices, as well as the importance of certain psychological characteristics of managers and employees as enhancers of the lack of ethics. It is clear that the social cost of accounting fraud should be minimized, and governments should develop specific policies that combine responsible corporate governance in companies with the sustainability of their environment.

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“…The negative side of these contracts is highlighted when intensification shown in misrepresentation and fraudulent financial data that mislead analysts about evaluation of firms (Johnson et al, 2005, Chesney andGibson-Asner, 2004). Interestingly, in some studies high compensation have negative association with fraud cases in china (Conyon and He, 2016) The arising question is based on executive either commit fraud just misinterpretation the stick price or by this means increase theirs payoffs under stock performance related compensation contract (Johnson et. al., 2005).…”

Section: Introductionmentioning

confidence: 99%