Accounting, Compensation, and Governance

Accounting information serves a central role in compensation contracting and corporate governance. Important recent developments in business and society, such as the changing nature of corporate reporting, companies’ use of new communication and reporting channels, and the growing availability of detailed, large-scale compensation data, force us to rethink what we know about the use of accounting in governing managers and companies. Has accounting become too complex or subjective to be useful for contracting and governance? Does the periodic disclosure of more and more non-accounting information change the nature of contracting and governance? Do more informal and timelier ways of interaction between managers and stakeholders, such as through social media, change the way in which managers are monitored? Can new large-scale datasets or data collection methods, such as web-scraping and textual analysis, help us to explore novel research questions in accounting, compensation, and governance? The purpose of this Ph.D. project is to identify and examine questions such as these, thereby contributing to an improved understanding of how accounting, and other forms of information, can help to ensure the efficient governance of modern companies.


Accounting, corporate governance, disclosure, executive compensation


Public companies prepare and disclose an increasingly broad range of information to shareholders, creditors, and other stakeholders. An important purpose of such information is to provide an account on the outcomes of managements’ investment and operating decisions, which allows stakeholders to effectively monitor and govern management. Concrete examples of the governance role of accounting information are the use of accounting based performance measures in managerial compensation contracts or the inclusion of accounting-based covenants in debt contracts. 

The role of accounting information in contracting and corporate governance has a long history in accounting research. For instance, previous studies have examined the role of accounting performance measures in contracting with managers and stakeholders, how properties of accounting information affect the quality of managerial decision-making, and how financial analysts or institutional investors shape governance of the firm.

Despite the substantial body of knowledge that demonstrates the importance of accounting information in contracting and corporate governance (see e.g., Armstrong et al. 2010; Ormazábal 2016), developments in business and society continue to present us with new challenges. They offer a wide variety of novel research questions and exciting opportunities.

One such challenge is the changing nature of corporate reporting. In an effort to make financial statements more informative about a company’s ‘true’ economic performance and financial position, accounting regulators have mandated the use of more complex accounting methods, lengthier footnote disclosures, and a stronger reliance on somewhat subjective estimates of fair value (e.g., Chychyla et al. 2019; Guay et al. 2016). Whether these changes make accounting information more effective for governance and contracting or simply too complex or subjective to rely on is an open question. Furthermore, responding to societal calls for greater accountability many companies have started to disclose a broader set of information, including metrics of environmental and social performance (see Christensen et al. 2018; Grewal et al. 2018; Khan et al. 2016). Whether and how such disclosures, also referred to as ‘integrated reports,’ (i) can be and are used in governance and contracting and (ii) effectively change the decisions that managers make are important questions for future research in accounting and governance. 

Another exciting opportunity for research lies in the increasing disclosure requirements on management compensation mandated by the regulators such as the U.S. SEC. In recent years, public (proxy) statements contain more and more detailed information about the way in which companies pay their top managers. New data on the details of compensation contracts, such as vesting terms, pay mix, and information on peer groups used for compensation purposes invite research, for instance on strategic selection and disclosure of peers, or how financial incentives affect managers’ decision making and firm outcomes (Bennet et al. 2017; Rhodes 2016; Lobo and Neel 2018). 

Finally, newer ways of communication such as social media, conference presentations, and conference calls have become a standard component of companies’ interactions with stakeholders (Blankespoor et al. 2014; 2018). An important question is whether such ways of communication are relevant for governance purposes and, if so, how they interact with traditional ways of disclosing accounting and non-accounting information. Furthermore, do these more informal and timelier ways of interaction between managers and stakeholders change the way in which managers are monitored and, consequently, change the role of accounting and formal contracting in corporate governance? 

The above examples are not meant to be exhaustive or directive, but provided to illustrate how developments in business and society continuously change the landscape of accounting and governance and, in turn, present us with new research questions. The purpose of this Ph.D. project in Accounting, Compensation, and Governance is to identify and explore such questions, thereby contributing to an improved understanding of how accounting, and other forms of information, can help to ensure the efficient governance of modern companies.

The structure of this Ph.D project will be as follows. During the first year, the Ph.D. student will receive high-quality training in accounting (and finance) research as well as (applied) econometric methods. At the end of the first year, the student will have developed a first proposal for three empirical studies, having much independence in selecting a research focus. During the following three years, these studies will be gradually developed into three working papers that are potentially publishable in high-quality academic journals. Especially during the early stages of the project, the Ph.D. student will intensively cooperate with the members of the supervisory team.


The research methodology used in this project is archival-based, using panel data econometric methods and accounting, executive compensation, governance, and price data from commercial databases. In addition, given the increased relevance of new communication channels as well as the limitations of commercial databases, this project may involve the (automated) collection and processing of textual disclosures.

Required Profile

The candidate has (a) a background in accounting, finance, econometrics or economics, (b) good quantitative skills, and (c) an international focus.

Expected output

The goal of the project is that the PhD candidate completes three research papers (leading to a dissertation) that are potentially publishable in leading accounting journals such as The Accounting Review, Journal of Accounting Research, Journal of Accounting and Economics, Review of Accounting Studies and Contemporary Accounting Research.


The decision whether or not to cooperate with other universities or research groups depends on future project choices. It is expected, however, that the Ph.D. candidate will spend at least 6 months at an international university as a visiting scholar.

Societal relevance

Studies arising from this research project have the potential to influence corporate governance and executive compensation practices, accounting regulation, and capital market regulation.

Scientific relevance

The project systematically evaluates accounting´s usefulness for investment and governance decisions by a firm’s stakeholders, both conceptually and empirically.

Literature references

Armstrong, C. S., W. R. Guay, and J. P. Weber. 2010. The role of information and financial reporting in corporate governance and debt contracting. Journal of Accounting and Economics 50 (2–3): 179–234.

Bennett, B., Bettis, J. C., Gopalan, R., & Milbourn, T. 2017. Compensation goals and firm performance. Journal of Financial Economics 124(2): 307-330.

Blankespoor, E., Miller, G. S., & White, H. D. 2013. The role of dissemination in market liquidity: Evidence from firms' use of Twitter™. The Accounting Review, 89(1): 79-112.

Blankespoor, E., deHaan, E., & Zhu, C. 2018. Capital market effects of media synthesis and dissemination: Evidence from robo-journalism. Review of Accounting Studies, 23(1): 1-36.

Christensen, H. B., L. Hail, and C. Leuz. 2018. Adoption of CSR and Sustainability Reporting Standards: Economic Analysis and Review. Working Paper.

Chychyla, R., A. J. Leone, and M. Minutti-Meza. 2019. Complexity of financial reporting standards and accounting expertise. Journal of Accounting and Economics 67 (1): 226–253.

Grewal, J., Riedl, E. J., & Serafeim, G. 2018. Market reaction to mandatory nonfinancial disclosure. Management Science 65 (7): 3061-3084.

Guay, W., D. Samuels, and D. Taylor. 2016. Guiding through the Fog: Financial statement complexity and voluntary disclosure. Journal of Accounting and Economics 62 (2–3): 234–269.

Khan, M., Serafeim, G., & Yoon, A. 2016. Corporate sustainability: First evidence on materiality. The Accounting Review, 91(6): 1697-1724.

Lobo, G. J., Neel, M., & Rhodes, A. 2018. Accounting comparability and relative performance evaluation in CEO compensation. Review of Accounting Studies 23(3): 1137-1176.

Ormazábal, G. 2016. The role of stakeholders in corporate governance: A view from accounting research. Foundations and Trends in Accounting 11 (4): 193–290.

Rhodes, A. (2016). The relation between earnings-based measures in firm debt contracts and CEO pay sensitivity to earnings. Journal of Accounting and Economics 61(1): 1-22.