MANAGERIAL SHARE OWNERSHIP AND DISCRETIONARY ACCRUALS IN AUSTRALIA: DO INDEPENDENT AND EXECUTIVE DIRECTORS HAVE DIFFERENT INCENTIVES?

Download This Article

Arifur Khan ORCID logo, Paul R. Mather ORCID logo

https://doi.org/10.22495/cocv9i1art8

Abstract

We examine the relation between managerial share ownership (MSO) and discretionary accruals in Australia. We find a positive relation between MSO and discretionary accruals up to a certain level of MSO followed by a negative relation (inverse U-shaped). We suggest that these unique results are a result of certain Australian institutional features that are markedly different to those in the US and the UK and imply that the ownership-discretionary accruals relation is context specific with the wider corporate governance systems influencing the theorised incentive effects. We also posit that executive directors and independent directors have different ownership-discretionary accruals incentives and report results consistent with this proposition.

Keywords: Managerial Share Ownership, Discretionary Accruals, Incentive Alignment, Entrenchment

How to cite this paper: Khan, A., & Mather, P. (2011). Managerial share ownership and discretionary accruals in Australia: Do independent and executive directors have different incentives? Corporate Ownership & Control, 9(1), 122-135. https://doi.org/10.22495/cocv9i1art8