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Equity incentives and corporate fraud in China

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Equity incentives and corporate fraud in China. / Hass, Lars Helge; Tarsalewska, Monika; Zhan, Feng.
In: Journal of Business Ethics, Vol. 138, No. 4, 11.2016, p. 723-742.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Harvard

Hass, LH, Tarsalewska, M & Zhan, F 2016, 'Equity incentives and corporate fraud in China', Journal of Business Ethics, vol. 138, no. 4, pp. 723-742. https://doi.org/10.1007/s10551-015-2774-2

APA

Hass, L. H., Tarsalewska, M., & Zhan, F. (2016). Equity incentives and corporate fraud in China. Journal of Business Ethics, 138(4), 723-742. https://doi.org/10.1007/s10551-015-2774-2

Vancouver

Hass LH, Tarsalewska M, Zhan F. Equity incentives and corporate fraud in China. Journal of Business Ethics. 2016 Nov;138(4):723-742. Epub 2015 Aug 6. doi: 10.1007/s10551-015-2774-2

Author

Hass, Lars Helge ; Tarsalewska, Monika ; Zhan, Feng. / Equity incentives and corporate fraud in China. In: Journal of Business Ethics. 2016 ; Vol. 138, No. 4. pp. 723-742.

Bibtex

@article{6cf59715b2264aeeae4be1ba67063de0,
title = "Equity incentives and corporate fraud in China",
abstract = "This paper explores how managers{\textquoteright} and supervisors{\textquoteright} equity incentives impact the likelihood of committing corporate fraud in Chinese-listed firms. Previous research has shown that corporate fraud in China is a widespread phenomenon and has severe consequences for affected firms and executives. However, our understanding of the reasons that fraud is committed in a Chinese setting has been very limited thus far. This is an increasingly important topic, because corporate governance is rapidly changing in China, and it is unclear whether adopting the executive compensation practices of the West is appropriate for Chinese firms. We show that managers{\textquoteright} equity incentives increase their propensity to commit corporate fraud. We also find that this effect is more pronounced for state-owned firms. However, we find a negative but not significant relationship between the equity incentives of the supervisory board and the incidence of fraud.",
keywords = "Equity incentives, Corporate fraud, Corporate governance, Ownership structure, Chinese economy",
author = "Hass, {Lars Helge} and Monika Tarsalewska and Feng Zhan",
note = "The final publication is available at Springer via http://dx.doi.org/10.1007/s10551-015-2774-2",
year = "2016",
month = nov,
doi = "10.1007/s10551-015-2774-2",
language = "English",
volume = "138",
pages = "723--742",
journal = "Journal of Business Ethics",
issn = "0167-4544",
publisher = "Springer Netherlands",
number = "4",

}

RIS

TY - JOUR

T1 - Equity incentives and corporate fraud in China

AU - Hass, Lars Helge

AU - Tarsalewska, Monika

AU - Zhan, Feng

N1 - The final publication is available at Springer via http://dx.doi.org/10.1007/s10551-015-2774-2

PY - 2016/11

Y1 - 2016/11

N2 - This paper explores how managers’ and supervisors’ equity incentives impact the likelihood of committing corporate fraud in Chinese-listed firms. Previous research has shown that corporate fraud in China is a widespread phenomenon and has severe consequences for affected firms and executives. However, our understanding of the reasons that fraud is committed in a Chinese setting has been very limited thus far. This is an increasingly important topic, because corporate governance is rapidly changing in China, and it is unclear whether adopting the executive compensation practices of the West is appropriate for Chinese firms. We show that managers’ equity incentives increase their propensity to commit corporate fraud. We also find that this effect is more pronounced for state-owned firms. However, we find a negative but not significant relationship between the equity incentives of the supervisory board and the incidence of fraud.

AB - This paper explores how managers’ and supervisors’ equity incentives impact the likelihood of committing corporate fraud in Chinese-listed firms. Previous research has shown that corporate fraud in China is a widespread phenomenon and has severe consequences for affected firms and executives. However, our understanding of the reasons that fraud is committed in a Chinese setting has been very limited thus far. This is an increasingly important topic, because corporate governance is rapidly changing in China, and it is unclear whether adopting the executive compensation practices of the West is appropriate for Chinese firms. We show that managers’ equity incentives increase their propensity to commit corporate fraud. We also find that this effect is more pronounced for state-owned firms. However, we find a negative but not significant relationship between the equity incentives of the supervisory board and the incidence of fraud.

KW - Equity incentives

KW - Corporate fraud

KW - Corporate governance

KW - Ownership structure

KW - Chinese economy

U2 - 10.1007/s10551-015-2774-2

DO - 10.1007/s10551-015-2774-2

M3 - Journal article

VL - 138

SP - 723

EP - 742

JO - Journal of Business Ethics

JF - Journal of Business Ethics

SN - 0167-4544

IS - 4

ER -