Management incentives have been suggested as a factor affecting the usefulness of reported earnings for readers of financial statements. Prior research has demonstrated that the quality of earnings has been associated with levels of managerial ownership (Warfield, Wild and Wild (1995)), audit...

Prior research has demonstrated that in companies with low managerial ownership managers exploit the latitude available in generally accepted accounting principles to alleviate contractual constraints, presumably to ensure job preservation (annual salary) and maximize incentive compensation...