Are there external factors that might lead companies to fail to
protect the integrity of their financial statements, to put it
euphemistically? Some recent articles in CFO.com discuss
studies that posit various theories.
Even though the SEC has yet to fulfill the Dodd-Frank mandate
requiring adoption of clawback policies, this article reports that the vast majority of
companies in the S&P 1500 have voluntarily adopted clawback
policies that enable companies to recover compensation that
executives received on the basis of misstated financial reporting.
Some early studies suggested that clawback policies
were likely to cause executives subject to those policies "to
push back against auditors proposing accounting restatements"
that would trigger the clawbacks. That would seem to suggest that
the clawback concept might be, well, counterproductive perhaps?
