Earnings management and asymmetric sensitivity of bonus compensation to earnings for high-growth firms

In this paper, we examine whether high-IOS (investment opportunity set) firms vis-à-vis non-growth (low-IOS) will not reduce discretionary expenditures, such as advertising expenses, research and development, SG&A (selling, general administrative) to further sustain the firm growth in a more conservative reporting environment (the post-Sarbanes-Oxley (SOX) period). We also investigate, an extension of prior sensitivity CEO bonuses earnings cases low-IOS firms. find stronger association between incentive compensation asymmetric bonus for pre-SOX period, disappears even post-SOX period. As study, look into accounting conservatism is period both than The findings are consistent with our hypotheses that firms, documented evidence study shows how regulatory changes affect accrual real management behaviors, those earnings, affects relation