Professors at the business schools of the University of Chicago, University of Michigan, and University of North Carolina study 50 frauds at companies like WorldCom and Enron, only to discover that “the probability of accounting fraud is increasing in the percent of total executive compensation that is stock-based.”
University of Michigan Business School
Posted inAccounting & Auditing
Stock Incentives To Meet Earnings Thresholds
Two professors from the University of Michigan Business School and another at NYU notes that a “disproportionately large number” of companies just meet (or beat) earnings forecasts, and examines the managerial incentives that could that explain the phenomenon.