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Self‐sacrifice or empty symbolism: A study of $1 CEOs

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  • Prabashi Dharmasiri
  • Mukesh Garg
  • Anthony Ng
  • Supardi Supardi

Abstract

We examine whether CEOs' voluntary acceptance of a $1 salary is a credible signal of sacrifice. We find that firms with $1 salary CEOs are: (i) more likely to be associated with income‐increasing accrual‐based earnings management; (ii) less likely to use real earnings management; and (iii) more likely to engage in corporate tax avoidance. Our results indicate that this performance enhancement is driven by the motivation to restore salaries to their original levels. Our results suggest that extreme salary sacrifice could indicate an empty promise to improve firm performance and should be considered cautiously by investors and regulators.

Suggested Citation

  • Prabashi Dharmasiri & Mukesh Garg & Anthony Ng & Supardi Supardi, 2024. "Self‐sacrifice or empty symbolism: A study of $1 CEOs," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(2), pages 1397-1437, June.
    • Handle: RePEc:bla:acctfi:v:64:y:2024:i:2:p:1397-1437
    DOI: 10.1111/acfi.13183
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