Purpose - The purpose of this study is to examine the possibility of adverse consequences regarding the recently enacted Dodd–Frank Act (DFA) pay-equity disclosure requirement in the USA, which will likely lead to lower levels of perceived Chief Executive Officer (CEO) pay fairness by subordinates. Specifically, the study examines whether the pay-equity disclosure leads to increased earnings management when business-unit managers have friendship ties with the CEO. Design/methodology/approach - An experiment is conducted wherein participants assume the role of a business-unit manager and are asked to provide an estimate for future warranty expense, which is used as a proxy for earnings management. The study manipulates friendship between the CEO and a business-unit manager and the saliency of CEO compensation pay-equity. Findings - CEO friendship ties, which are associated with lower levels of social distance, result in less earning management in the absence of the DFA CEO pay-equity ratio disclosure. However, CEO friendship may result in negative repercussions in terms of higher earnings management in the post-DFA environment when managers are provided with the pay-equity disclosure. Research limitations/implications - Future research may expand this study by examining how the adverse consequences of the CEO compensation saliency disclosure can be mitigated. Practical implications - Management, audit committees and internal auditors should consider the possibility of unintended consequences of the increased transparency of CEO pay-equity while designing management control systems. Social implications - This study highlights the importance of understanding how employees’ social relationships with leaders may influence their behavior. Originality/value - Unlike prior research, which focuses on senior executives’ direct incentives to manipulate earnings and subsequently increase their compensation, this study provides evidence regarding the earnings management behavior of business-unit managers.

中文翻译：

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CEO友谊和感知的薪酬公平性对业务部门经理的盈余管理行为的影响

目的-这项研究的目的是研究有关美国最近颁布的《多德-弗兰克法案》（DFA）薪资公平披露要求的不利后果的可能性，这可能会降低首席执行官的认知水平由下属支付公平。具体来说，该研究调查了当业务部门经理与首席执行官建立友谊关系时，薪资权益披露是否导致增加的盈余管理。设计/方法/方法-进行了一项实验，其中，参与者承担业务部门经理的角色，并被要求提供对未来保修费用的估计，以用作收益管理的代理。该研究操纵了CEO与业务部门经理之间的友谊以及CEO薪酬报酬的显着性。调查结果-与CEO之间的亲密关系与较低的社交距离相关，导致在缺乏DFA CEO薪资比率披露的情况下，收入管理减少。但是，如果向管理人员提供薪资权益披露，则CEO友谊可能会在后DFA环境中对更高的盈余管理产生负面影响。研究的局限性/意义-未来的研究可能会通过研究如何减轻CEO薪酬显着性披露的不利影响来扩大研究范围。实际意义-管理层，审计委员会和内部审计师在设计管理控制系统时，应考虑CEO薪酬公平性日益透明的意外后果的可能性。社会影响-这项研究强调了了解员工与领导者的社会关系如何影响其行为的重要性。独创性/价值-与先前的研究侧重于高管人员操纵收入并随后增加其薪酬的直接动机不同，本研究提供了有关业务部门经理的收入管理行为的证据。