Executive incentive compensation and earnings manipulation in a multi-period setting

Insider sales and earnings management

“…Prior literature provides a theoretical basis to empirical studies of insider trading and earnings management (Elitzur and Yaari, 1995;Trueman, 1990;Bar-Gill and Bebchuk, 2003). We predict that managers adjust discretionary accruals (DAs) to increase current-period earnings before they sell their own firmsÕ shares in the subsequent period.…”

The joint decision to manage earnings through discretionary accruals and asset sales around insider trading: Taiwan evidence

“…Elitzur and Yaari (1995) and Park and Park (2004) manifest a positive relationship between managers' net purchases and DA. No study has assessed the association between AS and insider trading activities.…”

“…Elitzur and Yaari (1995) provide theoretical evidence that there is a positive (negative) relationship between managers' purchases (sales) and DA. Park and Park (2004) demonstrate that insiders adjust DA to increase current earnings so that they are able to sell their stocks subsequently.…”

“…The alignment of insiders' personal wealth with the stock price performance motivates them to exploit their power over earnings management (EM) decisions (Bergstresser and Philippon 2006). In particular, EM is motivated by the insiders' need to manage earnings so that they are able to realize (avoid) significant capital gains (losses) by trading for their own accounts (Elitzur and Yaari 1995;Beneish and Vargus 2002;Park and Park 2004;Bergstresser and Philippon 2006;Ronen et al 2006).…”

Competitive Intensity as a Quasi-moderator of the Relationship between Innovative Efforts and Performance

“…This study utilizes two accounting-based performance measures as the dependent variables since it is interested in investigating the outcome of managerial discretionary efforts engaging in innovative efforts. Some studies have shown that managers prefer accounting-based performance measures that tend to be more controllable than market-based measures (Verrecchia 1986;Elitzur and Yaari 1995). Therefore, this study uses return on assets (ROA) and return on sales (ROS) to measure firms' performance.…”