Can Bonus Compensation Improve Earnings Management?

Abstract

The concept of bonus compensation to earnings management is growing. Decision making regarding the existence of a company's policy in providing bonus compensation to management is the primary phenomenon. This study aims to provide clarity about the phenomenon of bonus compensation to the existence of earnings management through a comprehensive and systematic literature review and can produce a clear description of the effect of bonus compensation on earnings management. This study analyzes a collection of 37 articles from 1976-2019 obtained through researchgate, Goggle Scholar, and others with the keywords "earnings management" and "bonus compensation." The results of this study divided into 3 (three) opinions: bonus compensation has an effect on earnings management, bonus compensation has a negative effect on earnings management, and bonus compensation has no effect on earnings management.