دانلود رایگان مقاله انگلیسی تأثیر انگیزه مسابقات بر روی ارائه مجدد امور مالی - الزویر 2018

ABSTRACT

In this study, we examine the association between tournament incentives and financial restatements in China. Prior research documents that tournament incentives have a positive impact on firm performance. However, an alternative view suggests that tournament incentives can also have detrimental effects on firm performance. Using a sample of Chinese listed companies for the years 2008–2015, we find that tournament incentives, in the form of large pay disparities, reduce the occurrence of both core and non-core financial restatements. This negative association is more pronounced for SOEs as compared to non-SOEs. We further document that the negative association between tournament incentives and financial restatements is related to CEO turnover, and is stronger if the successor CEO is recruited from within the organization. This research contributes to a better understanding of tournament incentives, as a corporate governance mechanism, in constraining the occurrence of financial restatements in a unique institutional setting where state ownership is pronounced.

 Concluding remarks

We examine the effect of tournament incentives on reducing the likelihood of financial restatements using data from Chinese A share listed companies. We find that tournament incentives in terms of a greater pay gap encourage executives to refrain from actions that might give rise to financial restatements ex-post. We also consider the effect of tournament incentives on core and non-core financial restatements, and document that tournament incentives constrain the occurrence of core as well as non-core restatements. We also find that tournament incentives in SOEs are more effective than tournament incentives in non-SOEs in constraining the occurrence of financial restatements. Such results contradict our hypothesis. Although previous studies suggest that the tournament (cash incentive) is weaker in SOEs, and its link to firm performance is found to be weaker, we argue that the size of the tournament reflects the executive's administrative position in the political hierarchy, the scale of the political promotion, and the political benefits the executives could receive when they are promoted. Tournament winners often receive higher levels of life-long benefits along with political promotion. These cannot be measured easily, but play a very important role in motivating SOE executives to reduce the occurrence of financial restatements. We also find that the negative association between tournament incentives and financial restatements is related to CEO turnover, and is stronger when the incoming CEO is recruited from within the organization.