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Synthesizing agency theory and prospect theory, we examined the effects of stockbased incentives on CEO earnings manipulation behaviors. In analyses of data compiled from the public companies listed in Compustat's Executive Compensation Database and a U.S. General Accounting Office restatements database, we found that CEOs were more likely to manipulate firm earnings when they had more out-of-the-money options and lower stock ownership. Firm performance and CEO tenure interacted with out-of-the-money options and ownership to influence CEO earnings manipulation behaviors. Our findings inform agency-based views by providing evidence that, under certain conditions, stock-based managerial incentives lead to incentive misalignment.We are grateful to Amy Hillman and three anonymous reviewers, all of whom offered exceptionally insightful suggestions. We also appreciate the helpful advice of Cathy C. Durham, Paul J. Hanges, and Charles LaHaie. Finally, we thank the individuals at the U.S. General Accounting Office, the Huron Consulting Group, and the U.S. Securities and Exchange Commission who were very generous with their assistance.

We investigate the effects of social and regulatory forces on a firm's decision to disclose past wrongdoing by voluntarily restating its earnings. With an eight-year sample of more than 2,500 public firms, including 170 voluntary restaters, we find that firms are more likely to voluntarily restate their earnings in response to informal social pressures from other firms in their industry and less likely to do so in response to formal regulatory sanctions. We also show that the impact of these forces varies with firm status. We contribute to corporate governance and public policy research that examines the effectiveness of “hard” versus “soft” deterrence measures on firm compliance.

The authors define family–business embeddedness as confluence of values and objectives stemming from the overlapping institutional contexts—family, business, and symbolic—in the family firm. Hence, the family–business embeddedness perspective investigates the effect of integrating divergent institutional values and objectives, economic and noneconomic, on family firm’s performance. The authors contend that family–business embeddedness and work centrality will magnify family employees’ job satisfaction, whereas superior job alternatives will produce an opposite effect. In turn, job satisfaction will be negatively related to family employees’ turnover intentions. A survey of 111 family employees from 70 family firms in the United States supported the hypotheses.

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