Earnings‐based compensation schemes and discretionary accrual and expenditure decisions over CEO tenure Available to Purchase

Classifies previous research on the links between earnings management and managerial opportunism into studies of the links between earnings‐based compensation schemes and opportunistic, short‐term earnings management; and earnings management around CEO changes. Suggests some reasons why the sensitivity of compensation to earnings and stock return performance measures might change over the length of CEO tenure and presents a study of 1970‐1991 US data to examine this. Finds that sensitivity to earnings is greater than to stock returns and that the significance of both varies during the first and second halves of tenure, as does the use of discretionar accruals. Considers the underlying reasons for this, consistency with other research and the implications for research and practice.