Are CEOs incentivized to shelter good information?
Corresponding Author
Hongrui Feng
Finance Department, Sam and Irene Black School of Business, Penn State Behrend, Erie, Pennsylvania
Correspondence
Hongrui Feng, Sam and Irene Black School of Business, Penn State Behrend, 4701 College Erie, PA 16563.
Email: hxf51@psu.edu
Search for more papers by this authorYuecheng Jia
Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorCorresponding Author
Hongrui Feng
Finance Department, Sam and Irene Black School of Business, Penn State Behrend, Erie, Pennsylvania
Correspondence
Hongrui Feng, Sam and Irene Black School of Business, Penn State Behrend, 4701 College Erie, PA 16563.
Email: hxf51@psu.edu
Search for more papers by this authorYuecheng Jia
Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
Search for more papers by this authorAbstract
Prior theoretical studies on the agency problem hold different opinions from the empirical literature on two questions: (a) Are CEOs incentivized to shelter good information? (b) Are CEOs incentivized to evenly shelter good and bad information? This paper demonstrates that CEOs with high pay-performance incentives tend to successfully shelter good information rather than bad information. Furthermore, CEOs with high pay-performance incentives shelter good information by using real earnings management and textual manipulation but not accrual-based earnings management. These asymmetric information manipulation behaviors help to decrease corporate cash flow volatility as well as the jump and crash risk on the stock market.
Supporting Information
| Filename | Description |
|---|---|
| fire12249-sup-0001-OnlineAppendix.pdf1.8 MB |
Table A.1: The description of main variables used in the study Table A.2: Correlation matrix Table A.3: The impact of the passage of Sarbanes–Oxley Act on the relation between Delta and R2 measures Table A.4: Table A.5: Table A.6: Delta and standardized R2 measures following Hutton, Marcus, and Tehranian (2009) Table A.7: Discretional accrual and Delta |
, 
, and Delta-driven real earnings management with industry fixed effect
, 
, and Delta-driven information bundling with industry fixed effectPlease note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article.
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