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Empirical tests of budget ratcheting and its effect on managers' discretionary accrual choices

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  • Leone, Andrew J.
  • Rock, Steve

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  • Leone, Andrew J. & Rock, Steve, 2002. "Empirical tests of budget ratcheting and its effect on managers' discretionary accrual choices," Journal of Accounting and Economics, Elsevier, vol. 33(1), pages 43-67, February.
  • Handle: RePEc:eee:jaecon:v:33:y:2002:i:1:p:43-67
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    1. Dechow, Patricia M. & Sloan, Richard G., 1991. "Executive incentives and the horizon problem : An empirical investigation," Journal of Accounting and Economics, Elsevier, vol. 14(1), pages 51-89, March.
    2. Murphy, Kevin J. & Zimmerman, Jerold L., 1993. "Financial performance surrounding CEO turnover," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 273-315, April.
    3. Chow, Chee W. & Cooper, Jean C. & Haddad, Kamal, 1991. "The effects of pay schemes and ratchets on budgetary slack and performance: A multiperiod experiment," Accounting, Organizations and Society, Elsevier, vol. 16(1), pages 47-60.
    4. Guidry, Flora & J. Leone, Andrew & Rock, Steve, 1999. "Earnings-based bonus plans and earnings management by business-unit managers1," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 113-142, January.
    5. Gaver, Jennifer J. & Gaver, Kenneth M. & Austin, Jeffrey R., 1995. "Additional evidence on bonus plans and income management," Journal of Accounting and Economics, Elsevier, vol. 19(1), pages 3-28, February.
    6. Basu, Sudipta, 1997. "The conservatism principle and the asymmetric timeliness of earnings," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 3-37, December.
    7. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563, Elsevier.
    8. Holthausen, Robert W. & Larcker, David F. & Sloan, Richard G., 1995. "Annual bonus schemes and the manipulation of earnings," Journal of Accounting and Economics, Elsevier, vol. 19(1), pages 29-74, February.
    9. Pourciau, Susan, 1993. "Earnings management and nonroutine executive changes," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 317-336, April.
    10. Jones, Jj, 1991. "Earnings Management During Import Relief Investigations," Journal of Accounting Research, Wiley Blackwell, vol. 29(2), pages 193-228.
    11. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December.
    12. Kanodia, C, 1993. "Participative Budgets As Coordination And Motivational Devices," Journal of Accounting Research, Wiley Blackwell, vol. 31(2), pages 172-189.
    13. DeFond, Mark L. & Park, Chul W., 1997. "Smoothing income in anticipation of future earnings," Journal of Accounting and Economics, Elsevier, vol. 23(2), pages 115-139, July.
    14. Kothari, S.P. & Leone, Andrew J. & Wasley, Charles E., 2005. "Performance matched discretionary accrual measures," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 163-197, February.
    15. Healy, Paul M., 1985. "The effect of bonus schemes on accounting decisions," Journal of Accounting and Economics, Elsevier, vol. 7(1-3), pages 85-107, April.
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    Cited by:

    1. Eyring, Henry & Narayanan, V.G., 2018. "Performance effects of setting a high reference point for peer-performance comparison," LSE Research Online Documents on Economics 86732, London School of Economics and Political Science, LSE Library.
    2. Yu Flora Kuang, 2008. "Performance-vested Stock Options and Earnings Management," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(9-10), pages 1049-1078.
    3. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December.
    4. Minkyung Kim & K. Sudhir & Kosuke Uetake & Rodrigo Canales, 2018. "When Salespeople Manage Customer Relationships: Multidimensional Incentives and Private Information," Cowles Foundation Discussion Papers 2122, Cowles Foundation for Research in Economics, Yale University.
    5. Yves Mard, 2005. "Vers Une Information Comptable Plus Transparente : L'Apport Des Recherches Portant Sur La Gestion Des Résultats Comptables," Post-Print halshs-00581229, HAL.
    6. Michaelides, Panayotis G. & Tsionas, Efthymios G. & Konstantakis, Konstantinos N. & Xidonas, Panos, 2019. "The impact of market competition on CEO salary in the US energy sector1," Energy Policy, Elsevier, vol. 132(C), pages 32-37.
    7. Hribar, Paul & Melessa, Samuel J. & Small, R. Christopher & Wilde, Jaron H., 2017. "Does managerial sentiment affect accrual estimates? Evidence from the banking industry," Journal of Accounting and Economics, Elsevier, vol. 63(1), pages 26-50.
    8. Leone, Andrew J. & Van Horn, R. Lawrence, 2005. "How do nonprofit hospitals manage earnings?," Journal of Health Economics, Elsevier, vol. 24(4), pages 815-837, July.
    9. Gerakos, Joseph & Kovrijnykh, Andrei, 2013. "Performance shocks and misreporting," Journal of Accounting and Economics, Elsevier, vol. 56(1), pages 57-72.
    10. Arnold, Markus C. & Artz, Martin, 2015. "Target difficulty, target flexibility, and firm performance: Evidence from business units’ targets," Accounting, Organizations and Society, Elsevier, vol. 40(C), pages 61-77.
    11. Christian Daumoser & Bernhard Hirsch & Matthias Sohn, 2018. "Honesty in budgeting: a review of morality and control aspects in the budgetary slack literature," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 29(2), pages 115-159, August.
    12. Afrah Junita & Erlina & Erwin Abubakar & Syukriy Abdullah, 2018. "The Effect of Budget Variances on the Local Government Budget Changes with Legislature Size as Moderator," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 162-173, March.
    13. Bouwens, Jan & Kroos, Peter, 2011. "Target ratcheting and effort reduction," Journal of Accounting and Economics, Elsevier, vol. 51(1), pages 171-185.
    14. Kuang, Y. & Qin, B., 2006. "Performance-vested Stock Options and Pay-Performance Sensitivity," Discussion Paper 2006-123, Tilburg University, Center for Economic Research.
    15. Jing Huang, 2018. "Foreign earnings management of US multinational companies: The role of decision rights," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(5), pages 552-574, July.
    16. Shota Otomasa & Atsushi Shiiba & Akinobu Shuto, 2015. "Management Earnings Forecasts as a Performance Target in Executive Compensation Contracts," CARF F-Series CARF-F-368, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    17. Fisher, Joseph G. & Frederickson, James R. & Peffer, Sean A., 2006. "Budget negotiations in multi-period settings," Accounting, Organizations and Society, Elsevier, vol. 31(6), pages 511-528, August.
    18. Denis Travaillé & Christine Marsal, 2007. "Automatisation des tableaux de bord et cohérence des comportements," Post-Print halshs-00534794, HAL.
    19. Michal Matějka & Korok Ray, 2017. "Balancing difficulty of performance targets: theory and evidence," Review of Accounting Studies, Springer, vol. 22(4), pages 1666-1697, December.

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