- Identity and incentives: impact on accounting manipulation
- Number of pages
- Melbourne/Tilburg/Amsterdam: University of Melbourne/Tilburg University/University of Amsterdam
- Document type
- Working paper
- Faculty of Economics and Business (FEB)
- Amsterdam Business School Research Institute (ABS-RI)
This study examines how individual characteristics of managers influence the incidence of accounting manipulation. We examine one particular characteristic argued to reduce agency costs, namely the extent to which an individual identifies with the firm (OI). Drawing on a database collected from financial controllers we find support for our expectations that incentive compensation contracts increase accounting manipulation. However, this relation is moderated by OI. Our results support Akerlof and Kranton’s (2005) theoretical model that OI reduces agency costs. That is, managers with incentive-based compensation engage in lower levels of accounting manipulation when they identify with the firm.
- August 19 2012
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