THE NEXUS BETWEEN EARNINGS MANAGEMENT, CEO COMPENSATION, AND FIRM VALUE: EMPIRICAL EVIDENCE FROM THE NAIROBI SECURITIES EXCHANGE

Autori

  • Remmy Wekesa Nyongesa University of Nairobi, Kenya
  • Cyrus I. Mwangi Professor, University of Nairobi, Kenya
  • Joshua M. Wanjare Professor, University of Nairobi, Kenya

DOI:

https://doi.org/10.46827/ejefr.v8i4.1791

Ključne reči:

chief executive officer compensation, earnings management, corporate governance, firm value

Apstrakt

This study investigates the intricate relationships between earnings management, CEO compensation, and firm value within companies listed on the Nairobi Securities Exchange (NSE). Utilizing a comprehensive dataset spanning 10 years, the research delves into how earnings management practices influence CEO compensation structures and, subsequently, the overall value of the firm. The study employs robust econometric models to analyze the interactions between these variables, shedding light on whether earnings management serves as a tool for CEOs to meet performance targets and enhance their compensation or if it detracts from the firm's long-term value. Empirical findings reveal significant correlations, indicating that firms engaging in higher levels of earnings management tend to exhibit more aggressive CEO compensation packages. Moreover, the study highlights the dual-edged nature of earnings management, showing its potential to positively and negatively impact firm value depending on the context and magnitude of such practices. The insights gained from this research contribute to the broader discourse on corporate governance, providing valuable implications for regulators, investors, and policymakers aiming to enhance the transparency and accountability of executive compensation and financial reporting practices in emerging markets.

 

JEL: G34, M41, J33, G32, C33, G15

 

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Biografije autora

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    Remmy Wekesa Nyongesa is a doctoral candidate at the University of Nairobi, Faculty of Business and Management Science. He is a certified public accountant (CPA-K) with a decade of experience in the private sector. His research interests include earnings management, corporate governance and reporting, sustainability accounting, taxation, and corporate finance.

  • {$ime} {$affilijacija}

    Prof. Cyrus Mwangi is the Chairman of the Department of Finance and Accounting at the University of Nairobi. He has over 20 years of teaching and management consulting for both private and public sectors. His research interests are in finance and accounting – with a wealth of experience in investments and portfolio management, corporate governance, and management accounting.

  • {$ime} {$affilijacija}

    Prof. Joshua Wanjare is the Associate Dean of the Faculty of Business and Management Science at the University of Nairobi. He has more than two decades of teaching, research, and consultancy experience in the fields of finance and accounting.

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Preuzimanja

Objavljeno

2024-08-08

Broj časopisa

God. 8 Br. 4 (2024)

Rubrika

Articles