Investigating the effect of CEO 's performance incentives on fraud in financial reporting

Document Type : Original Article

Authors

1 Assistant Professor of Accounting, Kar Non-Profit University, Qazvin, Iran

2 M.Sc. student of Management Accounting, Kar Non-Profit University, Qazvin, Iran

Abstract

The purpose of this study is to investigate the effect of CEO 's performance incentives on financial reporting fraud among companies listed on the Tehran Stock Exchange. To achieve this goal, in the calculation of financial reporting fraud, Auditing Standard No. 40 entitled Auditor's Liability for Fraud and Error in Financial Statements, which identified 19 cases of fraud, was used to measure Obtaining the CEO 's performance incentives. Two ratios were used (the ratio of the CEO 's shares to the total shares of the company and the ratio of the CEO 's reward to the annual stock dividend). The statistical sample includes 82 companies during the period 2010 to 2019. The hypothesis test was performed according to logistic regression with respect to zero and one dependent variable with eviews software. The results showed that the incentive to pay incentives based on CEO performance (ratio of CEO reward to annual stock dividend) has no significant effect on financial reporting fraud, but the incentive to pay incentives based on CEO performance (ratio of CEO shares to total company shares) It has a significant and inverse effect on financial reporting fraud.

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References

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New Applied Studies in Management, Economics & Accounting
Volume 4, Issue 4
December 2021
Pages 66-83

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History

  • Receive Date: 19 September 2021
  • Revise Date: 13 October 2021
  • Accept Date: 17 November 2021

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