Doctoral Dissertations

Date of Award


Degree Type


Degree Name

Doctor of Philosophy


Business Administration

Major Professor

Bruce K. Behn

Committee Members

Terry L. Neal, Joan M. Heminway, Russell Zaretzki


This paper investigates the effectiveness of voluntary clawback provisions as a deterrent for earnings management behavior. The Dodd-Frank (DF) Bill signed into law July 21, 2010 mandates that the SEC adopt a rule requiring all U.S.-listed companies to implement clawback provisions that recapture excess compensation received by executives on the basis of a faulty financial statement filing with the SEC that later must be restated. Implicitly, the DF regulation assumes that clawbacks will successfully constrain financial misreporting and that a “one-size-fits-all” approach is best. In contrast with prior research that has investigated factors associated with a firm’s decision to adopt a clawback provision and/or various capital market consequences associated with clawback adoptions, I develop a stringency metric for analyzing clawback structures. I analyze the financial reporting consequences associated with clawback structure and mediating effects of antecedent corporate governance quality. Preliminary results indicate that, for both weak-governance and strong-governance firms adopting clawback provisions, increased clawback stringency is generally associated with lower levels of earnings management. However, the deterrent effect of clawback stringency is often attenuated for the strong-governance firms. None of the identified adopting firms had duality of the CEO and Chairman positions, thus, confirming that clawback adoptions may be conceptualized as a component of strong governance. This observation, coupled with the documented success of the clawbacks in deterring earnings management, provides support for the need for regulation.

Files over 3MB may be slow to open. For best results, right-click and select "save as..."

Included in

Accounting Commons