Study: Execs With Accounting Experience Linked to Higher Risk of Accounting Misstatements, If Given Pay Incentive
conducted by researchers at the University of Missouri
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“Competence, alone, is a great thing,” said Elaine Mauldin, a professor of accountancy in the Robert J. Trulaske, Sr. College of Business at the University of Missouri. “Research has actually shown that, in general, it results in fewer misstatements. However, we found that when both competence and financial incentives are present, this dark side of accounting competence emerges.”
“These executives have both the incentive and ability to change the books,” Mauldin said. “On the other hand, competence lulls auditors into a sense of security. Auditors need to be aware of the heightened risk these executives represent.”