Clawback provisions and insider trading profits

IF 3.3 3区管理学 Q1 BUSINESS, FINANCE

Journal of Accounting and Public Policy Pub Date : 2024-09-17 DOI:10.1016/j.jaccpubpol.2024.107242

引用次数: 0

Abstract

Mitigating managerial rent extraction in the form of excess pay and insider trading profits based on financial misreporting is an important governance issue. Clawback provisions allow companies to recover excess pay related to misreported earnings when accounting restatements occur in subsequent periods. We examine whether clawback provisions effectively restrict insider trading profits through improved financial reporting quality. Our finding is that insider trading profits decrease after clawback adoption, and this effect is more prominent when clawback provisions are adopted to improve rather than signal already high levels of financial reporting quality. Moreover, we find that offering managers additional explicit pay to compensate for the increased compensation risk imposed by clawback provisions enhances the effectiveness of these provisions in curbing insider trading profits. Overall, our findings support the efficacy of clawback provisions in mitigating rent extraction through insider trading.

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退还条款和内幕交易利润

减少以超额薪酬和内幕交易利润为形式的基于财务报告失实的管理者租金提取是一个重要的治理问题。退还条款允许公司在随后的会计重述期间收回与虚报收益相关的超额薪酬。我们研究了退还条款是否能通过提高财务报告质量来有效限制内幕交易利润。我们的研究结果表明，在采用回拨条款后，内幕交易利润会减少，而且当采用回拨条款是为了提高财务报告质量，而不是表明财务报告质量已经很高时，这种效果会更加明显。此外，我们还发现，为管理人员提供额外的明确薪酬以补偿因回拨条款而增加的补偿风险，会增强这些条款在抑制内幕交易利润方面的效果。总体而言，我们的研究结果支持回拨条款在减少通过内幕交易进行租金提取方面的有效性。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Journal of Accounting and Public Policy Multiple-

CiteScore

4.80

自引率

2.80%

发文量

期刊介绍： The Journal of Accounting and Public Policy publishes research papers focusing on the intersection between accounting and public policy. Preference is given to papers illuminating through theoretical or empirical analysis, the effects of accounting on public policy and vice-versa. Subjects treated in this journal include the interface of accounting with economics, political science, sociology, or law. The Journal includes a section entitled Accounting Letters. This section publishes short research articles that should not exceed approximately 3,000 words. The objective of this section is to facilitate the rapid dissemination of important accounting research. Accordingly, articles submitted to this section will be reviewed within fours weeks of receipt, revisions will be limited to one, and publication will occur within four months of acceptance.