Association Among Executive Overconfidence, Compensation, Corporate Governance, and FraudulentFinancial Reporting

• Main Authors: Chen,Cih-Yi, 陳慈儀
• Other Authors: Li,Chun-An
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/94901536896107895702

碩士 === 國立雲林科技大學 === 財務金融系 === 104 === Based on evidence from data using all companies on the Taiwan Stock Exchange (TSE) and over-the-counter market during the period 2005-2014, the objective of this article is to investigate associations among fraudulent financial reporting, executive overconfidence, compensation, and corporate governance. The results of probit regression models indicate that the probability of fraudulent financial reporting, defined as prosecuted companies or its person in charge is higher in overconfident executive that also holds the position of the director of the board, compared with that do not. Also, total executive compensation and cash compensation are both negatively significant associated with financial reporting fraud, meaning that total executive compensation, in particular cash compensation, reduce the incidence of fraud. However, there is a positively significant relationship between stock-based compensation and financial reporting fraud. One possible reason is that stock-based compensation and the company's share price has interactive relation, therefore executive may devoted to raise the company's share price in order to maximize the stock-based compensation and eventually increase the incidence of fraud. In addition, the shareholding of managers, the shareholding of institutional investors, the proportion of independent directors, the proportion of outside directors are positively significant associated with fraudulent financial reporting. A possible explanation of these results is the influence of agency problem.