Two Essays on Fair Value Accounting and Compensation Contracts PDF Download
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Author: Feng Tang
Publisher:
ISBN:
Category : Compensation management
Languages : en
Pages : 96
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Book Description
Author: Feng Tang
Publisher:
ISBN:
Category : Compensation management
Languages : en
Pages : 96
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Book Description
Author: Chang Mo Kang
Publisher:
ISBN:
Category :
Languages : en
Pages : 322
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Book Description
This dissertation examines how the structures of compensation for executives and directors are affected by the possibility that managers can influence the risk of a firm's cash flows. In chapter 1, I consider a moral hazard model which shows that a strong pay-for-performance sensitivity in managerial compensation may deteriorate shareholder value when shareholders cannot monitor managerial risk-seeking activities. Intuitively, while high-powered managerial compensation provides the manager with incentives to increase the firm's value by exerting effort, it also creates managerial incentive to engage in (unproductive) risk-seeking activities. To test this prediction, I consider a regulatory change that makes it more difficult for managers to conceal information about the (speculative) use of derivative instruments. Specifically, I examine how the structures of compensation for executives and managers are affected by the adoption of a new accounting standard, the Statement of Financial Accounting Standard No. 133 Accounting for Derivative Instruments and Hedging Activities (FAS 133) which mandates the fair value accounting for derivative holdings. Consistent with the model prediction, I find that relative to other firms, derivative users (firms that traded derivatives before adopting FAS 133) increase the pay-for-performance sensitivity of CEO/CFO compensation. In Chapter 2, I extend the model by incorporating the realistic features that shareholders delegate to the (self-interested) board the tasks of monitoring managers and of setting their compensation contracts. My analysis shows that while high-powered board compensation induces the board to monitor the firm and to properly design managerial compensation, it also provides the board with incentives to misreport managerial risk-seeking activities and to engage in collusive behavior with the manager at the expense of shareholders. From these trade-offs, I develop a number of testable hypotheses and take them to the data. Consistent with the model predictions, I find that firms in which (i) managerial risk-seeking activities are more likely to occur (e.g., high R&D firms or banks) and (ii) board monitoring costs are likely to be lower (e.g., firms that have non-officer blockholders on the board) show weaker pay-for-performance sensitivity of board compensation and stronger pay-for-performance sensitivity of CEO compensation.
Author: Gilad Livne
Publisher: Routledge
ISBN: 1317221311
Category : Business & Economics
Languages : en
Pages : 757
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Book Description
The concept of "fair value" marked a major departure from traditional cost accounting. In theory, under this approach a balance sheet that better reflects the current value of assets and liabilities. Critics of fair value argue that it is less useful over longer time frames and prone to distortion by market inefficiencies resulting in procyclicality in the financial system by exacerbating market swings. Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by internationally recognized experts, this book, on a controversial and intensely debated topic, is a comprehensive reference source which: examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against looks at fair value from a number of different theoretical and practical perspectives, including a critical review of the merits and arguments against the use of fair value accounting explores fair value accounting in practice, involvement in the Great Financial Crisis, implications for managerial reporting discretion, compensation and investment This volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting.
Author: Rick Antle
Publisher: Springer Science & Business Media
ISBN: 0387303995
Category : Business & Economics
Languages : en
Pages : 334
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Book Description
The integration of accounting and the economics of information developed by Joel S. Demski and those he inspired has revolutionized accounting thought. This volume collects papers on accounting theory in honor of Professor Demski. The book also contains an extensive review of Professor Demski’s own contributions to the theory of accounting over the past four decades.
Author: Joanne Horton
Publisher:
ISBN:
Category :
Languages : en
Pages : 141
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Book Description
'Fair value' is currently the central topic of debate in the development of accounting standards. While it has now been defined to mean an exit price in US GAAP, the IASB is still considering its own definition, and some commentators are arguing for versions of entry price, or for differing prices in different circumstances or for different types of asset and liability. The FASB and IASB are aiming to achieve full fair value accounting for financial instruments, and both have already made this optional in many circumstances. But both theoretical and practical challenges still remain to a mandatory requirement. And whether fair values (exit or entry) should be used in revenue recognition and in presenting performance; and how far changes in fair value should be recognised as gains and losses in income or earnings when markets are not deep and active, remain hotly contested areas of dispute. Such measurement issues are likely to prove the most controversial stage in the current revision and convergence of the FASB's and IASB's conceptual frameworks.One industry where practical experiments in wholesale fair value accounting have been developing in the UK and elsewhere since the 1990s is life insurance. Standard setters have also taken up the challenge of determining the most appropriate accounting. The latest proposals from IASB, under 'Phase II' of its project on insurance contracts, that are currently out for discussion now contemplate requiring a form of fair value accounting by insurers. While insurance is often regarded as the technical preserve of industry specialists and the actuarial profession, most of the issues of principle are common to accounting for all kinds of assets and liabilities in all kinds of businesses. The life insurance experiments and related debates can therefore help to illuminate the wider discussion of the future role of fair value accounting. And what is decided as the standard for life insurance may in turn change the way accounting is done more generally - or alternatively fear of such a consequence may end up inhibiting the adoption of the best alternative for insurance. So the arguments about life insurance accounting are too important to be left to those directly involved in it.
Author: International Accounting Standards Board
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 104
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Author:
Publisher:
ISBN:
Category : Dissertations, Academic
Languages : en
Pages : 634
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Author: Filipe Balmaceda
Publisher:
ISBN:
Category : Incentives in industry
Languages : en
Pages : 258
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Author: International Accounting Standards Board
Publisher:
ISBN:
Category : Disclosure of information
Languages : en
Pages : 32
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Author: International Accounting Standards Board
Publisher:
ISBN:
Category : Disclosure of information
Languages : en
Pages : 40
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Book Description
