Jae Hwan Ahn , Syed Zulfiqar Ali Shah , Gitae Park
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引用次数: 0
Abstract
A fraud mechanism, where managers inflate stock prices via misreporting for post-misreporting insider trading, is well captured by the delta of their equity portfolio. But a widely accepted view in the literature is that the impact of delta on misreporting is unclear because delta-related rewards (e.g., gains from insider trading) and risks (e.g., detection of fraud) likely offset each other. In this paper, we predict and find a concave association between managers’ portfolio delta and misreporting propensity, and the misreporting curve’s changing maximum points depending on the levels of various risk and reward factors. Our results are consistent with managers who reduce opportunistic misreporting at a higher level of equity incentives to avoid the increasing marginal costs of misreporting.
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.
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