Publication Type
Journal Article
Version
submittedVersion
Publication Date
4-2011
Abstract
We examine the relationship between equity incentives and earnings management in the banking industry. By focusing on this regulated industry and using industry-specific earnings management proxies, we provide evidence on the impact of regulation on earnings management arising from chief executive officers' equity incentives. We find that bank managers with high equity incentives are more likely to manage earnings, but only when capital ratios are closer to the minimums required by regulators. This finding indicates that, in the banking industry, potential regulatory intervention induces, rather than mitigates, earnings management arising from equity incentives.
Keywords
Banking, Earnings, Equity Incentives, Regulations
Discipline
Accounting | Corporate Finance | Finance and Financial Management
Research Areas
Financial Performance Analysis
Publication
Journal of Accounting, Auditing and Finance
Volume
26
Issue
2
First Page
317
Last Page
349
ISSN
0148-558X
Identifier
10.1177/0148558X11401219
Publisher
SAGE
Citation
CHENG, Qiang; WARFIELD, Terry; and YE, Minlei.
Equity incentives and earnings management: Evidence from the banking industry. (2011). Journal of Accounting, Auditing and Finance. 26, (2), 317-349.
Available at: https://ink.library.smu.edu.sg/soa_research/824
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1177/0148558X11401219