The Relationship between CEO Compensation and Earnings Quality

Abstract

Purpose This research indicates that the uses of bookkeeping performance measures between CEO money pay understanding and income high quality. According to research assume that the valuation and evaluation uses of bookkeeping details are linked through the details risk. Through research anticipate finding that the breathing difficulties of CEO money settlement to accruals and money flows are associated with accumulation high quality and income determination.Methodology Through research, discover that there is a significant positive relationship between the CEO compensation and the earnings quality. According to research, discover no association between the asymmetric pay-sensitivity to stock returns and income high quality, and no relationship between determination to pay understanding of income. This analysis extends the bookkeeping literary works on income high quality.Findings This analysis also leads to the discussion of one of the problems of CEO compensation acquiring since there appears to be no evidence showing that CEO receives incentives for confirming top high quality income details and penalties for confirming low high quality income details. And through research also find that some CEO’s are not interested in compensation performing well within the organization without compensation and any other bonuses.

Keywords: CEO compensation, Earnings quality, Profitability ratios analysis.