Journal of Accounting and Economics Vol. 7 No. 1-3 1985
The effect of bonus schemes on accounting decisions
Abstract
Studies examining managerial accounting decisions postulate that executives rewarded by earnings-based bonuses select accounting procedures that increase their compensation. The empirical results of these studies are conflicting. This paper analyzes the format of typical bonus contracts, providing a more complete characterization of their accounting incentive effects than earlier studies. The test results suggest that (1) accrual policies of managers are related to income-reporting incentives of their bonus contracts, and (2) changes in accounting procedures by managers are associated with adoption or modification of their bonus plan.
- DOI
- 10.1016/0165-4101(85)90029-1
- Volume
- 7
- Issue
- 1-3
- Pages
- 85-107
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref