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Corporate Governance, CEO Compensation and accounting conservatism

Author

Listed:
  • Pakamas Srichoke

    (University of Amsterdam, Amsterdam Business School, Plantage Muidergracht 12, 1018 TV, Netherlands)

  • Georgios Georgakopoulos

    (Agricultural University of Athens, Iera Odos 75, Athens 118 55, Greece)

  • Alexandros Sikalidis

    (International Hellenic University, 14th km Thessaloniki- Nea Moudania 57001, Greece)

  • Athina Sotiropoulou

    (University of Patras, University Campus, 26504 Rio Achaia, Greece)

Abstract

Purpose: This study examines the moderating impact of corporate governance quality on the relation between CEO bonus compensation and accounting conservatism. Design/methodology/approach: We use market-based and accrual-based measures to estimate accounting conservatism. According to prior literature (Core, Holthausen and Larcker, 1999; Bhojraj and Sengupta, 2003; Rees and Rodionova, 2015), agency and managerial self-interest theory state that corporate governance strength can mitigate the negative relation between CEO bonus compensation and accounting conservatism. Finding: Our sample consists of S&P 500 companies while our empirical findings suggest that CEO bonus compensation and accounting conservatism are positively associated. Research limitations/implications: Thus, our results do not provide clear evidence about the direction of the effect of strong corporate governance. Both measures of accounting conservatism do not give significant relations, therefore the results about corporate governance strength are contradicting. The results hold the same after controlling for industry-specific effects. Originality/value: The purpose of this study is to shed light to the literature of accounting conservatism, corporate governance and CEO compensation. Furthermore, this research examines the current situation of corporate governance and motivates future improvement of corporate governance mechanisms.

Suggested Citation

  • Pakamas Srichoke & Georgios Georgakopoulos & Alexandros Sikalidis & Athina Sotiropoulou, 2021. "Corporate Governance, CEO Compensation and accounting conservatism," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 14(1), pages 80-95, June.
    • Handle: RePEc:tei:journl:v:14:y:2021:i:1:p:80-95
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate Governance; Executive Compensation; Accounting and Auditing;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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