Date of Graduation


Document Type


Degree Type



Chambers College of Business and Economics



Committee Chair

Richard Dull

Committee Member

Trevor Sorensen

Committee Member

Lauren Cooper

Committee Member

Paul Speaker


This dissertation is comprised of three studies that examine the impact of incentives on management behavior to complement agency problems literature. The first paper studies whether incentives associated with firm life cycle stages impact management disclosure quality. The second paper explores these incentives more deeply and investigates whether the likelihood of fraud is different across life cycle stages. The third paper examines whether rating agencies play a role in alleviating agency problems in nonprofit organizations by increasing public exposure and reducing information asymmetry.

Study one examines the relationship between firms’ life cycle stages and disclosure quality. Life cycle stages are measured following Dickinson (2011), who recently redefined firm life cycle in terms of firms’ operating, investing, and financing cash flows. The analysis provides evidence that disclosure quality is significantly different across firm life cycle stages. Specifically, firms in the introduction, growth, and mature life cycle stages have higher disclosure quality than firms in other life cycle stages. Another test observes significant differences in disclosure quality within life cycle stages based on firms’ profitability and size. This study contributes to the financial disclosure literature by documenting firms’ life cycle stage as a significant determinant of disclosure quality.

In study two, the incentives associated with life cycle stages are explored to a greater extent, and this study investigates whether firm life cycle is associated with fraud. According to fraud theory, incentives and opportunities are important factors that lead to fraud (Dorminey, Fleming, Kranacher, and Riley 2012). Following Dickinson (2011), this paper uses cash flow patterns as a proxy for life cycle stages. Firms in different life cycle stages have different combinations of signs of cash flows, so the incentives and opportunities are likely to be different. Therefore, we expect that the likelihood of committing fraud is different across life cycle stages. We identify 182 fraud firms with available data from the AAER database and utilize a 4-to-1 matched sample, as well as the overall sample in our analysis. The paper finds that introduction stage is positively associated with fraud, while mature firms are negatively associated with fraud.

Study three investigates whether nonprofit rating availability is negatively associated with CEO pay-to-performance sensitivity. Prior studies on agency theory suggest that agency problems exist in both for-profit organizations and nonprofit organizations, and research on agency problems for nonprofit organizations focuses on the role of nonprofit board. However, some other studies point out that there are limitations of the monitoring role of the board. On the other hand, donors provide funds to nonprofit organizations, and they have more substantial incentives to monitor nonprofit organizations. Balsam and Harris (2014) and Balsam and Harris (2018) find evidence that donors look unfavorably at higher compensation. Therefore, if monitoring of donors is available, it is likely that CEO compensation will be lower. Research finds that donors use rating information to make donation decisions (Gordon, Knock, and Neely 2009; Harris and Neely 2016). Therefore, charity rating agencies provide a tool for donors to monitor nonprofit organizations. Using data from Charity Navigator and nonprofit organization tax forms, this study finds that charity rating availability is negatively associated with CEO pay-to-performance sensitivity for nonprofit organizations.

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Accounting Commons