The impact of accounting comparability on CEO incentive plans in an emerging economy: the moderating role of board independence
ISSN: 1321-7348
Article publication date: 18 July 2023
Issue publication date: 1 February 2024
Abstract
Purpose
The present study investigates the impact of accounting comparability on chief executive officer (CEO) incentive plans and the moderating role of board independence for companies listed in Tehran Stock Exchange (TSE).
Design/methodology/approach
The information about 177 companies in 2014–2021 was examined. In this study, equity-based compensation and cash-based compensation were used as the CEO incentive plans. The equity-based compensation was calculated through the ownership of the CEO shares.
Findings
The results suggest that the higher accounting comparability increases not only CEO equity-based compensation, but also cash-based compensation. Board independence also strengthens the relationship between accounting comparability and CEO compensation. Hypothesis testing based on robustness checks confirmed these results.
Originality/value
The paper is pioneering, to the authors' knowledge, in identifying how board independence moderates the impact of accounting comparability on CEO compensation. The findings provide insights into economic consequences to the firm related to accounting comparability and board monitoring. The results have important practical implications for international investors to evaluate accounting comparability, corporate governance mechanisms and CEO incentives.
Keywords
Acknowledgements
The authors are especially grateful to the editor and the anonymous reviewers for their insightful, constructive and valuable comments.
Citation
Arianpoor, A. and Efazati, S. (2024), "The impact of accounting comparability on CEO incentive plans in an emerging economy: the moderating role of board independence", Asian Review of Accounting, Vol. 32 No. 1, pp. 51-69. https://doi.org/10.1108/ARA-01-2023-0002
Publisher
:Emerald Publishing Limited
Copyright © 2023, Emerald Publishing Limited