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The effect of outside directors' and auditors' incentives on managers' ability to manage cash bonuses.
- Source :
- Journal of Management & Governance; May2014, Vol. 18 Issue 2, p505-540, 36p, 7 Charts, 2 Graphs
- Publication Year :
- 2014
-
Abstract
- This paper investigates the impact of outside directors' and auditors' monetary incentives on the association between discretionary accounting and managers' cash bonuses in a two-tier system. For a sample of German stock corporations from 2005 to 2007 we expect and find that outside directors who receive compensation based on accounting income and auditors who receive high non-audit fees have the incentive to tolerate managers' bonus-increasing accounting choices. More specifically, we show that positive discretionary accruals are more strongly associated with managers' cash bonuses than negative discretionary accruals if outside directors receive accounting-based compensation and/or if auditors receive high non-audit fees. Our results suggest that executives' ability to manage their cash bonuses depends on the monitoring institutions' monetary incentives. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 13853457
- Volume :
- 18
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Journal of Management & Governance
- Publication Type :
- Academic Journal
- Accession number :
- 95275676
- Full Text :
- https://doi.org/10.1007/s10997-012-9252-3