The effect of pay disparities within top management on conservative reporting
3 - 10 April 2022
Biography
Beatriz Garcia Osma is Professor of Accounting at Universidad Carlos Ill de Madrid. Previously, she was Associate Professor of Accounting and Finance at Universidad Autonoma de Madrid. She holds a PhD in Accounting & Finance from Lancaster University, where she was also a Marie Curie preand post-doctoral researcher. Her research focuses on the links between financial reporting, corporate governance and capital markets. Professor Garcia Osma has published in national and international journals and she has participated and directed several major research projects. She teaches financial accounting, and business analysis and valuation.
She was elected to represent Spain on the Board of the European Accounting Association (2014-2020), and also, as a member of the EAA Management Committee (2014-2017). She is the editor of the European Accounting Review (2020-2023) and of the Spanish Journal of Finance and Accounting (2017-). Professor Garcia Osma belongs to several editorial boards of international journals and she leads the European Accounting Association Doctoral Colloquium. She regularly speaks at major academic and professional international conferences and her research has informed accounting standard setters and regulators, such as European Financial Reporting Advisory Group, Institute of Chartered Accountants of Scotland and the International Accounting Standards Board.
Summary
Accounting conservatism is a property of financial reporting that follows the adage of 'anticipate no profit but anticipate all losses'. In particular, it implies that associated cash flows to reported earnings should be verifiable. Regulators and scholars regularly argued regarding the effects of conservatism in financial reporting. Whereas some believe that conservatism protects stakeholders from managerial excessive optimism, others argue that it creates a potential bias in financial reporting. In this project we examine how senior managers' compensation structure that mimics tournament incentives affects conditional conservatism in financial reporting. We show that firms with larger pay disparities between the chief executive officer (CEO) and the next tier of executives on the senior management team-our proxy for tournament incentives-are likely to produce less conservative financial reports. Our results contribute to our understanding of executive compensation structures that foster risk taking and financial reporting.
Professor Garcia Osma is hosted by Dr Mariano Scapin, Economics, Finance and Management.
Planned events include:
Public Lecture
Users and the financial reporting system
Date and time tbc
This lecture will explore the extent to which users influence the specific issue of financial reporting quality. For example, what do we know about the role and influence of shareholder activists and large institutional investors in relation to earnings management? To what extent do wider stakeholder groups such as customers and suppliers influence financial reporting? In answering these questions, the Lecture will discuss how regulation and incentives might be better used to encourage users to engage on issues relating to financial reporting quality.
Professor Garcia Osma will also be meeting with graduate students to discuss doctoral dissertations in Accounting and Finance, drawing on her vast experience of mentoring and fostering young scholars.
