DOI: 10.5176/2010-4804_2.1.167
Authors: Philémon Rakoto
Abstract:
The objective of this paper is to study the combined impact of corporate internal and external governance and of excessive executive equity incentives on earnings restatement in Canada. The study was conducted using data from 29 Canadian firms that restated net earnings during the 2006 to 2011 period. A control sample of 87 firms selected based on size, industry and fiscal year-end was also analyzed (3 control firms per default firm). The data are analyzed using a t-test, the Pearson correlation and logistic regression. CEO duality, weak independence of the board and the audit committee, the presence of excessive stock option compensation of executives, weak presence of outside blockholders, and poor quality external audits are associated with earnings restatement.
Keywords: corporate governance; stock option; earnings restatement; CanadaI.
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