alexa Discuss Whether Incentive Executive Compensation Poses Governance Issues
ISSN: 2167-0234

Journal of Business & Financial Affairs
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Discuss Whether Incentive Executive Compensation Poses Governance Issues

Abbott Haron*

Higher Colleges of Technology, Business Higher Colleges of Technology, Sharjah Women’s College, University City Sharjah, Sharjah, United Arab Emirates

*Corresponding Author:
Abbott Haron
Business Faculty, Higher Colleges of Technology
Business Higher Colleges of Technology
Sharjah Women’s College, University City Sharjah
Sharjah, United Arab Emirates
Tel: +971505072291
E-mail: [email protected]

Received December 05, 2014; Accepted May 18, 2015; Published June 05, 2015

Citation: Haron A (2015) Discuss Whether Incentive Executive Compensation Poses Governance Issues. J Bus Fin Aff 4:137. doi:10.4172/2167-0234.1000137

Copyright: © 2015 Haron A. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

 

Abstract

Executive compensation structures (joined with bank accounting regulations) encouraged the delivery of misleading information booking income “above the line,” however retaining liabilities off the balance sheet. Executives paid with stock options are motivated to increase the market value of shares, and this may be more simply done by increasing reported income than by increasing true profits. Though Sarbanes-Oxley fixed some of the problems that were uncovered in the Enron and associated scandals, it did nothing about stock options. With stock options not being expensed, shareholders frequently were not fully apprised of their cost. This provides durable incentives to pay exorbitant compensation through stock options. However, the use of stock options emboldens bad accounting practices

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