'No' to Stock-Based Compensation for Directors: Is there an Association between Directors' Compensation and Financial Statements Fraud? Forthcoming in Journal of International Accounting, Auditing and Taxation (JIAAT)

Key Points

• Directors' compensation influences the likelihood of financial statements fraud, highlighting governance issues.
• The analysis indicates a significant connection, with stock-based compensation potentially increasing fraud risk.
• Assessment of financial statements reveals discrepancies linked to directors' compensation practices.
• This suggests that improved oversight could reduce the risk of fraud in financial disclosures.