【报告主题】Does Restricting Managers’ Discretion through Accounting Standards Improve Performance Measures Used in Compensation Contracts?
【主讲嘉宾】程林，中欧国际商学院
【报告时间】2025年10月14日 14:00
【报告地点】会计学院106室
【内容提要】
Prior literature consistently finds that restricting managers’ discretion within GAAP-based financial statements most often prevents managers from conveying information, resulting in less useful metrics, notwithstanding theoretical benefits from limiting opportunism. We examine a setting where the opportunism-limiting benefits of restricting managers’ discretion are likely to be maximized relative to other settings—compensation contracts. We find that adjustments to contractual metrics are more likely when GAAP is more restrictive, even when managers have the highest observed levels of incentive to increase earnings. Further, adjustments made when GAAP is more restrictive do not seem to be opportunistic in that they (1) do not increase compensation levels or the likelihood of achieving bonus thresholds and (2) have no predictive value for future performance. In contrast, we find that adjustments that are less likely to be a result of GAAP being restrictive do bear the telltale signs of opportunistic adjustments — greater compensation and likelihood of achieving bonus thresholds and predictive value for future performance. Overall, our evidence suggests that GAAP earnings is less useful in compensation contracts when GAAP is restrictive and that adjustments made under restrictive GAAP do not seem to be opportunistic.