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政大機構典藏 > 商學院 > 會計學系 > 期刊論文 > Item 140.119/78509

Please use this identifier to cite or link to this item: https://nccur.lib.nccu.edu.tw/handle/140.119/78509

Title:	Equity-Based Executive Compensation, Managerial Legal Liability Coverage and Earnings Management
Authors:	Weng, Tzu-Ching;Tseng, Chia-Hsuan;Chen, Chun-Ho;Hsu, Yun-Sheng 曾家璿
Contributors:	會計系
Keywords:	Equity-based compensation;Directors’ and officers’ liability insurance coverage;Earnings management
Date:	2014-05
Issue Date:	2015-09-15 15:28:22 (UTC+8)
Abstract:	This study investigates how managers’ compensation incentives, as measured by equity-based executive compensation and managerial legal liability coverage affect earnings management. The availability of compensation may encourage managers to adopt more aggressive accounting practices; however, the higher the legal liability managers face, the more it will reduce their willingness to engage in such risk-taking behavior. Once managers mitigate their personal legal liability through directors’ and officers’ (D&O) liability insurance, they may be more inclined to manipulate reported earnings. We use excess D&O liability insurance coverage as a proxy for managerial liability coverage and test a sample of listed firms in Taiwan where D&O liability insurance purchases are publicly disclosed. We find that managers whose compensation is equity-based are more likely to adopt an opportunistic accounting strategy when they are covered by relatively high levels of D&O liability insurance; this suggests that the primary determination of earnings management is the joint effect of an increase in managers’ compensation incentives and a decrease in their legal liability.
Relation:	Journal of Applied Finance and Banking, 4(3), 167-193
Data Type:	article
Appears in Collections:	[會計學系] 期刊論文

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