Abstract

http://ssrn.com/abstract=1553116
 
 

References (48)



 
 

Citations (3)



 


 



Performance-Based Incentives for Internal Monitors


Chris Armstrong


University of Pennsylvania - Accounting Department

Alan D. Jagolinzer


University of Colorado - Leeds School of Business

David F. Larcker


Stanford University - Graduate School of Business

February 15, 2010

Rock Center for Corporate Governance at Stanford University Working Paper Series No. 76
Stanford University Graduate School of Business Research Paper No. 2052

Abstract:     
This study examines the use of performance-based incentives for internal monitors (general counsel and chief internal auditor) and whether these incentives impair monitors’ independence by aligning their interests with the interests of those being monitored. We find evidence that incentives are greater when monitors’ job duties contribute more to the firm’s production function, when other top managers receive greater incentives, and when a firm has lower expected litigation risk. We also find evidence that firms provide more incentives when there is greater demand for internal monitoring. We find no evidence that internal monitor incentives impair the monitoring function. Instead, our results suggest that adverse firm outcomes (e.g., regulatory enforcement actions and internal-control material-weakness disclosures) occur less frequently at firms that provide greater monitor incentives.

Number of Pages in PDF File: 42

Keywords: performance-based incentives, internal monitors, general counsel, accounting irregularities

JEL Classification: M46

working papers series





Download This Paper

Date posted: February 16, 2010 ; Last revised: April 4, 2012

Suggested Citation

Armstrong, Chris and Jagolinzer, Alan D. and Larcker, David F., Performance-Based Incentives for Internal Monitors (February 15, 2010). Rock Center for Corporate Governance at Stanford University Working Paper Series No. 76 ; Stanford University Graduate School of Business Research Paper No. 2052. Available at SSRN: http://ssrn.com/abstract=1553116 or http://dx.doi.org/10.2139/ssrn.1553116

Contact Information

Chris S. Armstrong
University of Pennsylvania - Accounting Department ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Alan D. Jagolinzer
University of Colorado - Leeds School of Business ( email )
419 UCB
Boulder, CO 80309-0419
United States
David F. Larcker (Contact Author)
Stanford University - Graduate School of Business ( email )
Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Feedback to SSRN


Paper statistics
Abstract Views: 2,644
Downloads: 569
Download Rank: 26,599
References:  48
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.328 seconds