The Impact of earnings management on executive compensation among selected industrial publicly listed companies in the Philippines


Zahra Tabrizi

Date of Publication


Document Type

Master's Thesis

Degree Name

Master of Science in Accountancy


Ramon V. Del Rosario College of Business



Thesis Adviser

Rodiel C. Ferrer

Defense Panel Chair

Herminigilda E. Salendrez

Defense Panel Member

Marivic V. Manalo
Carmelita C. Clerigo


This study investigated the relationships between earnings management and executive compensation in selected industrial publicly-listed firms in the Philippine Stock Exchange (PSE) specifically belonging in the industrial sector. This study examined the effects of discretionary accruals on executive compensation. This study is geared towards figuring out whether the earnings management has no impact on executive compensation, bonus and salary among selected industrial publicly listed company in the Philippines.

To test this, accrual and compensation data from the publicly-listed firms is used. The relative size of the compensation types will be used to measure the compensation variables. Further, the accrual approach-initially measuring the level of total accruals is used in measuring earnings management. The results showed that the use of discretionary accruals increases executive compensation.

The results from this research show that compensation and fixed salaries has positive relationship with discretionary accruals. However, bonus compensation has no linear relationship with discretionary accruals there by opposing the results of prior studies.

It is worthy to note that discretionary accruals are not tantamount to fraudulent manipulation of accounting figures. These arose the freedom given by accounting standards requiring management discretion. Currently, the economic environment of the Philippine is table and on a rising momentum. This growth is catapulted by the strong performance of majority of the industries in the Philippine Stock Exchange, industrial sector included. Hence, It is crucial for investors, and the public as a whole, to be aware of the possible ramifications of discretionary accruals and earnings management for them not to be misled. Also, governing bodies of corporation must adopt to minimize, if not mitigate, the possible abuse of discretionary power given to the management. Lastly, to support the growth of this country, reservoir of knowledge must be filled. There is scarcity of researchers pertaining to the topic of this study. Academic researchers can use this study as a reference in furtherance of their own.

Abstract Format






Accession Number


Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

125 leaves ; 28 cm.


Earnings management--Philippines; Executives--Salaries; etc--Philippines

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