This paper examines managerial compensation in an environment where managers may take a hidden action that affects the … contract in this setting, and demonstrate that contracts contingent on reported earnings cannot provide managers with the …

Managers appear to manipulate firm earnings when they characterize pension assets to capital markets and alter … earnings to the assumed long-term rate of return on pension assets. Managers are more aggressive with assumed long-term rates … of return when their assumptions have a greater impact on reported earnings. Managers also increase assumed rates of …

unusually low CEO turnover and rely on internal management promotions. Their managers exercise stock options faster than … managers of other firms. Cartel firms are large donors to political candidates. While our results are based only upon firms … engaged in price fixing, we expect that they should apply generally to all companies in which managers seek to conceal poor …