Work

Does Executive Compensation Affect Accounting Irregularities? Evidence From Listed Firms in Indonesia

Year: 2022

Type: article

Abstract: This research examined the association between executive compensation and accounting irregularities in Indonesia. Employing 1,100 firm-year observations during 2014 to 2017 period, we found that executive compensation is positively associated with accounting irregularities. This result is robust after we mitigated a serial order correlation of accounting irregularities and a self-selection bias using propensity score matching. We also discovered a positive relationship after considering alternative measures of accounting irregularities. Furthermore, we documented that the positive association between executive compensation and accounting irregularities is stronger for firms with higher board independence. Our findings provide important insights for regulators and Asian emerging market regulators who are considering promoting equity incentives for listed firms.

Source: SAGE Open

DOI: 10.1177/21582440221111109

Authors: Gatot Soepriyanto, Engkos Achmad Kuncoro, Arfian Erma Zudana, Livia Averine

Institution: Binus University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $1,200