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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 34, 2015 DOI: 10.1016/j.jcorpfin.2015.07.008

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Tournament incentives and corporate fraud

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Tournament incentives and corporate fraud. / Hass, Lars Helge; Müller, Maximilian; Vergauwe, Skralan.

In: Journal of Corporate Finance, Vol. 34, 10.2015, p. 251-267.

Research output: Contribution to journalJournal articlepeer-review

Harvard

Hass, LH, Müller, M & Vergauwe, S 2015, 'Tournament incentives and corporate fraud', Journal of Corporate Finance, vol. 34, pp. 251-267. https://doi.org/10.1016/j.jcorpfin.2015.07.008

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Author

Hass, Lars Helge ; Müller, Maximilian ; Vergauwe, Skralan. / Tournament incentives and corporate fraud. In: Journal of Corporate Finance. 2015 ; Vol. 34. pp. 251-267.

Bibtex

@article{470e841c54fc42f7a396b41a034db6a3,
title = "Tournament incentives and corporate fraud",
abstract = "This paper identifies a new incentive for managers to engage in corporate fraud stemming from the relative performance evaluation feature of CEO promotion tournaments. We document higher propensities to engage in fraud for firms with strong tournament incentives (as proxied for by the CEO pay gap). We posit that the relative performance evaluation feature of CEO promotion tournaments creates incentives to manipulate performance, while the option-like character can motivate managers to engage in risky activities. We thereby extend previous corporate fraud literature that focuses mainly on equity-based incentives and reports mixed findings. Our results are robust to using different fraud samples, and controlling for other known determinants of fraud as well as manager skills.",
keywords = "Corporate fraud, Tournament incentives, CEO pay gap",
author = "Hass, {Lars Helge} and Maximilian M{\"u}ller and Skralan Vergauwe",
note = "This is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 34, 2015 DOI: 10.1016/j.jcorpfin.2015.07.008",
year = "2015",
month = oct,
doi = "10.1016/j.jcorpfin.2015.07.008",
language = "English",
volume = "34",
pages = "251--267",
journal = "Journal of Corporate Finance",
issn = "0929-1199",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Tournament incentives and corporate fraud

AU - Hass, Lars Helge

AU - Müller, Maximilian

AU - Vergauwe, Skralan

N1 - This is the author’s version of a work that was accepted for publication in Journal of Corporate Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Corporate Finance, 34, 2015 DOI: 10.1016/j.jcorpfin.2015.07.008

PY - 2015/10

Y1 - 2015/10

N2 - This paper identifies a new incentive for managers to engage in corporate fraud stemming from the relative performance evaluation feature of CEO promotion tournaments. We document higher propensities to engage in fraud for firms with strong tournament incentives (as proxied for by the CEO pay gap). We posit that the relative performance evaluation feature of CEO promotion tournaments creates incentives to manipulate performance, while the option-like character can motivate managers to engage in risky activities. We thereby extend previous corporate fraud literature that focuses mainly on equity-based incentives and reports mixed findings. Our results are robust to using different fraud samples, and controlling for other known determinants of fraud as well as manager skills.

AB - This paper identifies a new incentive for managers to engage in corporate fraud stemming from the relative performance evaluation feature of CEO promotion tournaments. We document higher propensities to engage in fraud for firms with strong tournament incentives (as proxied for by the CEO pay gap). We posit that the relative performance evaluation feature of CEO promotion tournaments creates incentives to manipulate performance, while the option-like character can motivate managers to engage in risky activities. We thereby extend previous corporate fraud literature that focuses mainly on equity-based incentives and reports mixed findings. Our results are robust to using different fraud samples, and controlling for other known determinants of fraud as well as manager skills.

KW - Corporate fraud

KW - Tournament incentives

KW - CEO pay gap

U2 - 10.1016/j.jcorpfin.2015.07.008

DO - 10.1016/j.jcorpfin.2015.07.008

M3 - Journal article

VL - 34

SP - 251

EP - 267

JO - Journal of Corporate Finance

JF - Journal of Corporate Finance

SN - 0929-1199

ER -