Corporate Governance, Accounting Conservatism, and Manipulation
| Autor: | Volker Laux, Judson Caskey |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
050208 finance
business.industry Investment efficiency Strategy and Management Corporate governance Ceteris paribus 05 social sciences Accounting 050201 accounting Management Science and Operations Research Conservatism Accounting conservatism Incentive Investment decisions 0502 economics and business Accounting information system business |
| Zdroj: | Management Science. 63:424-437 |
| ISSN: | 1526-5501 0025-1909 |
| Popis: | We develop a model to analyze how board governance affects firms’ financial reporting choices and managers’ incentives to manipulate accounting reports. In our setting, ceteris paribus, conservative accounting is desirable because it allows the board of directors to better oversee the firm’s investment decisions. This feature of conservatism, however, causes the manager to manipulate the accounting system to mislead the board and distort its decisions. Effective reporting oversight curtails managers’ ability to manipulate, which increases the benefits of conservative accounting and simultaneously reduces its costs. Our model predicts that stronger reporting oversight leads to greater accounting conservatism, manipulation, and investment efficiency. This paper was accepted by Mary Barth, accounting. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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