股票期权奖励与盈余管理动机外文翻译

外文翻译

原文：

Stock Option Compensation and Earnings

Management Incentives

This study focuses on the relation between the structure of executive compensation and incentives to manage reported earnings. Specifically, we examine whether the use of stock options relative to other forms of pay influences discretionary accrual choices around option award dates. We conduct this study in part because of the apparent trend over the past two decades toward the use of options in executive pay. Compensation research has consistently shown that option awards, measured on a fair value basis, now represent on average the largest component of CEO pay (Murphy [1999]; Baker [1999]; Matsunaga [1995]; Yermack [1995]). Not surprisingly, this trend seems to have contributed to increased scrutiny of CEO pay and to have led directly to several public policy initiatives during the 1990s.For example, accounting standard setters adopted a series of rules that greatly expanded investor reporting requirements on options (SEC [1992, 1993]; FASB [1995]), and, in 1993, Congress enacted tax legislation intended to curb nonperformance-based executive pay (see Reitenga et al. [2002]; Perry and Zenner [2001]). Furthermore, as reported in the financial press, criticism of the magnitude of option awards, including criticism by investors, seems to occur regularly (e.g.Orwall [1997]; Jereski [1997]; Fox [2001]; Colvin [2001]). Standard setters and politicians are currently reexamining disclosure rules, offering evidence that options continue to be a difficult public policy issue (Schroeder [2001]; Hamburger and Whelan [2002]; WSJ [2002]).

Until recently, academic research has typically focused on testing the use of options within an agency theory framework, primarily examining incentive alignment aspects. Arguably, by tying executive pay to stock price outcomes, options encourage managers to make operating and investing decisions that maximize shareholder wealth (Jensen and Meckling [1976]). Though results are mixed, the empirical

evidence on options as a component of executive pay has generally supported such agency-based predictions. However, other studies document unexpected effects on the firm as well, including surprising evidence that awarding options can induce opportunistic behavior by management. The line of research most relevant for our study is one that suggests that managers manipulate the timing of news releases or option award dates (or both) as a means of increasing the fair value of their awards. For example, Aboody and Kasznik (2000) report evidence indicating that managers time the release of voluntary disclosures, both good and bad news, around award dates in order to increase the value of the options awarded. Since the exercise price of the option is typically set equal to the share price on award date, managers can conceivably increase their option compensation by releasing bad news before the award date. Consistent with this reasoning, Chauvin and Shenoy (2001) find that stock prices tend to decrease prior to option grants, while Yermack (1997) finds that stock prices tend to increase following option grants. The former effect would typically decrease the exercise price of the option at award date. The latter would increase the option's intrinsic value afterward.

One way managers can influence the stock price of the firm is to manipulate reported performance (Subramanyam [1996]). We argue that the evidence in Aboody and Kasznik regarding voluntary disclosures in general implies that there could also be an incentive to manage reported earnings. We extend Aboody and Kasznik by examining whether option compensation creates incentives for CEOs to actively intervene not only in the timing of voluntary disclosure, but in the financial reporting process as well. We predict that managers receiving a relatively large portion of their compensation in the form of options will use discretionary accruals to report lower operating performance hoping to temporarily suppress stock prices.

In addition to addressing the concerns of policymakers, our research is motivated by the fact that while a good deal of research has examined the role of bonus plans in motivating managers' self-interested behavior (e.g., Healy [1985]; Lambert and Larcker [1987]; Lewellen et al. [1987]; Gaver et al. [1995]; Holthausen et al. [1995]; Reitenga et al. [2002]), relatively little published research investigates how stock