TITLE

Equity Incentives and Earnings Management: Evidence from the Banking Industry

AUTHOR(S)
Cheng, Qiang; Warfield, Terry; Ye, Minlei
PUB. DATE
April 2011
SOURCE
Journal of Accounting, Auditing & Finance;Apr2011, Vol. 26 Issue 2, p317
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
We examine the relationship between equity incentives and earnings management in the banking industry. By focusing on this regulated industry and using industry-specific earnings management proxies, we provide evidence on the impact of regulation on earnings management arising from chief executive officers’ equity incentives. We find that bank managers with high equity incentives are more likely to manage earnings, but only when capital ratios are closer to the minimums required by regulators. This finding indicates that, in the banking industry, potential regulatory intervention induces, rather than mitigates, earnings management arising from equity incentives.
ACCESSION #
67004290

 

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