CEO Compensation and Earnings Management-The Moderating Role of COVID-19 Pandemic: Evidence from Bangladesh

Abstract

This study examines the impact of CEO compensation on earnings management and the moderating role of COVID-19 pandemic on this connection using accrual and real earnings management techniques in an emerging economy context. The annual reports of non-financial enterprises in Bangladesh from 2011 to 2021 have been analyzed in order to compile the data being collected. The methodologies of accrual and real earnings management are utilized in the beginning stages of the study in order to measure earnings management. Following this, the research employs the ordinary least square model in order to determine the findings of the regression. According to the findings of the study, there is a negative correlation between the compensation of CEOs and both accrual and actual earnings management. In addition, during the COVID-19 pandemic phase, businesses had a tendency to participate in real earnings management less frequently than they did before the pandemic outbreak. It is interesting to note that the data underline the fact that CEO compensation and the COVID-19 epidemic combined have a favorable impact on real-earnings management. The findings of the study make a contribution to the existing body of literature on corporate governance by offering insights into the influence that CEO compensation has on earnings management. It is anticipated that the findings of the study will be helpful for corporate policymakers in the process of formulating policies that are suited for lowering the earning management strategies that are utilized in businesses.