New Professor in Financial Accounting Examines Corporate Governance and Executive Compensation
The Telfer School of Management welcomes Professor Lamia Chourou, a new faculty member in the Accounting Section. With a Ph.D. in Accounting from Queen's University and a Ph.D. in Finance from the University of Tunis, professor Chourou brings a research focus on capital markets. She was previously a Teaching Fellow at Queen's School of Business. Professor Chourou has published in refereed journals such as the Canadian Journal of Administrative Sciences, the Journal of Multinational Financial Management, and the Canadian Investment Review.
Dr. Chourou’s study of executive compensation in the Canadian context provided something of a departure from previous research that had centred on executive compensation in the U.S. Using a sample of Canadian firms, she examined whether owner managers in Canadian family-owned businesses “expropriate” minority shareholders, with the CEOs receiving higher compensation than the non-owners. She demonstrated that there was indeed evidence of this, particularly when voting and cash-flow rights diverge; the higher the divergence the higher the excess compensation, according to this study published as a lead paper in the Canadian Journal of Administrative Sciences (2010).
The positive news, the study found, was that “good governance helps mitigate or even resolve the problem of managerial opportunism.”
Professor Chourou is continuing her research into executive compensation. She has completed, for example, a study focusing on manipulation of stock options granted to CEOs. The Sarbanes-Oxley Act (SOX) restricted the time frame allowed for reporting of stock option grants to two days, thereby making dishonest backdating much less likely in the U.S. context. Professor Chourou says her upcoming study provides “an opportunity to see whether (and in what manner) Canadian domestic firms cross-listed in the U.S. stock market in the wake of SOX have adjusted the way they manipulate stock option grants.”
Professor Chourou is also interested in examining managers’ accounting discretion in preparing financial statements. For instance, her thesis dealt with managerial discretion in estimating fair values. She found evidence indicating that the market to a larger extent trusts fair value estimates by managers of firms located in more religious areas in the U.S. She also found that religiosity matters more when other external monitoring mechanisms are low. Her thesis adds to the new emerging literature on the effect of firm geographic location on several accounting and finance issues.