The Effect of Real Earnings Management and Corporate Governance on CEO Compensation

김진배,; 최경수,; 이민영,

doi:10.17287/kmr.2015.44.2.459

Cited by 3 publications

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“…On average, the return on assets (ROA) of the current fiscal year is 1.1%. by CEO type, the signs on the correlation match that of prior studies that look at earnings management and the determinants of loss avoidance (Kim et al, 2009;Jung & Kim, 2014;Park et al, 2015).…”

Section: Descriptive Statisticssupporting

confidence: 72%

CEO Type and Earnings Management to Avoid Loss or Earnings Decreases: Evidence from South Korea

Lee

2023

GADJAH MADA INT. J. BUS.

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This study examines the relations between the CEO type (owner CEO vs. professional CEO) and earnings management over 9,266 firm-years from 2011 to 2020 in Korea. Two earnings management measures, accrual management and real activity management (abnormal cash flow from operations, abnormal production cost, and abnormal discretionary expense), are considered as means to avoid reporting losses or earnings decreases. We partition the sample into two groups based on the type of CEO (owner CEO vs. professional CEO) and investigate whether earnings management is used for achieving earnings targets (small profit or small earnings increases) for each group. We find all earnings management measures are significant at the 5% level or better in the direction of aggressive earnings management in the owner CEO sample, while all but one measure (abnormal production cost) are insignificant in the professional CEO sample. Our findings suggest that an owner CEO is more likely to manage earnings to achieve small profit or small earnings increases compared to a professional CEO.

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Section: Descriptive Statisticssupporting

confidence: 72%

CEO Type and Earnings Management to Avoid Loss or Earnings Decreases: Evidence from South Korea

Lee

2023

GADJAH MADA INT. J. BUS.

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“…In relation to this, Sims and Sunley (1992) and Guenther (1994) found that managers used a tax strategy to minimize their corporate tax by deferring the profits generated in the year just before TRA86 was implemented to the next year or by lowering their profits. Additionally, Kim, Lee, and Choi (2014) conducted an empirical analysis of Korean listed companies from 2003 to 2011 considering the year of a corporate tax rate cut. It was argued that the sensitivity was increased; these results were interpreted as meaning that managers who intentionally lowered profits in the year prior to the corporate tax rate cut would receive relatively high compensation for the same performance.…”

Section: Review Of the Literature And Research Hypothesesmentioning

confidence: 99%

Tax policies for high-tech companies and tax avoidance in China

Yoon

Jiang

Cao

2023

IJAEFA

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The New Enterprise Income Tax Act was passed by the Chinese government in 2008, which reduced the tax rate from 33% to 25% and applied a tax rate of 15% to high-tech businesses as a preferential tax policy. This shows that high-tech businesses are taxed differently from other businesses. The study aims to analyse how the Chinese government's ownership affects the tax avoidance of high-tech enterprises. The analysis's findings are listed below. First off, high-tech corporations engaged in more tax avoidance than other businesses did before to the 2008 tax rate cut. This means that high-tech companies, with large effect of the tax rate cut, have more incentives to minimize their tax burden in the year immediately preceding the tax rate cut compared to general companies. Second, the higher the Chinese government's ownership ratio, the lower the level of tax avoidance. Third, the higher the ownership is, the higher the tax avoidance behaviour becomes in the year just before the tax rate cut. This study provides policy implications pertaining to the tax avoidance behaviour of companies in the case of tax rate cuts and experimental situations in which a differential tax exists.

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“…또한, (Lee et al, 2012;Choi et al, 2012). 또한 기업지배구조가 우수한 기업의 경우 경영자의 이익조정행위에 대해 경영자 보상에 불이익을 주는 것으로 나타나 우수한 기업지배구조가 실질적으로 경영자의 보상을 모니터링하고 있는 것으로 나타났다 (Kim et al, 2015). Yun and Lee(2017) (Anderson et al, 2003) (5)는 다음과 같다.…”

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Do Korean Pension Guidelines Improve Firms’ Management Efficiency?

Ahn¹,

Hong²

2022

Korean J Financ Stud

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This study examines whether Korean pension guidelines that limit the payment of director show practical policy effectiveness by improving corporate management efficiency. Specifically, this study examines stickiness of pay to determine whether opportunistic executive payment existed in firms where executive pay was above 50% of articles of incorporation, before the announcement of the Korean pension guidelines. Further, we examine how executive pay stickiness has changed after the implementation of Korean pension guidelines to check whether they have been effective in improving corporate management efficiency. We use data from 2011 to 2019 and determine that, prior to the announcement of Korean pension guidelines, firms who paid above 50% of articles of incorporation showed higher executive payment stickiness. This suggests that these firms had a more opportunistic payment structure. However, this stickiness disappears after the announcement of Korean pension guidelines in 2020, suggesting that the Korean pension guidelines for executive pay show policy effectiveness. However, in 2020, the majority of decision-making within firms was affected by the global pandemic; therefore, there exists a need for additional research using a sample unaffected by the impact of the pandemic.

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The Effect of Real Earnings Management and Corporate Governance on CEO Compensation

Cited by 3 publications

References 0 publications

CEO Type and Earnings Management to Avoid Loss or Earnings Decreases: Evidence from South Korea

CEO Type and Earnings Management to Avoid Loss or Earnings Decreases: Evidence from South Korea

Tax policies for high-tech companies and tax avoidance in China

Do Korean Pension Guidelines Improve Firms’ Management Efficiency?

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