Publication Type

Journal Article

Publication Date

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

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