出版社：LLC “Consulting Publishing Company “Business Perspectives”
摘要：This paper develops a static model of earnings manipulation as illicit activity conducted by top executives of a firm, such as a firm's chief financial officer or chief executive officer.In the model,the utility-maximizing executive decides upon an allocation of time,a costly resource,to the commission of licit and illicit accounting activity based on the expected benefits and costs of these actions.Illicit accounting practices may benefit the firm's profitability and possibly the executive's compensation but also incur risks of detection and subsequent sanctions,including jail time;the expected cost of the illicit activity potentially acts as a deterrence to such practices.We investigate comparative-static relationships that formalize how the individual's illegal activity might increase or decrease given variation in key ex?ogenous factors,some of which may reflect official policy or procedure.Our study provides a more concrete concep?tual foundation for empirical analysis than typically observed in the earnings-management literature.
