This paper investigates the role of outside options in the executive labor market on earnings management decisions. To proxy for executives’ outside options, we use the number of times other firms cite the executive’s firm as a compensation peer. We find that executives with more citations conduct less earnings management. Exploiting the 2006 SEC requirement for compensation peer disclosure as a quasi-natural shock to executives’ awareness of outside options, we show that the executives who should be more responsive to outside options significantly reduce earnings management. Cross-sectional tests support a labor market discipline channel of outside options. Finally, we exploit state-level recognition of Inevitable Disclosure Doctrine and enforcement of non-compete agreements as cross-sectional restrictions on labor mobility and show that the impact of peer citations on reducing earnings management is stronger when there are fewer restrictions on mobility.

本文研究了外部选择权在高管劳动力市场上对盈余管理决策的作用。为了代表高管人员的外部选择权，我们使用其他公司引用高管人员的公司作为薪酬同伴的次数。我们发现被引用更多的高管人员进行的盈余管理较少。利用2006年SEC对薪酬同peer披露的要求，作为对高管们对外部选择权意识的准自然冲击，我们表明，应该对外部选择权做出更多反应的高管们大大降低了盈余管理。横断面测试支持外部选择的劳动力市场纪律渠道。最后，