SAS No. 99 suggests that firms that base a significant portion of managements’ remuneration (e.g., bonuses or stock options) on achieving aggressive performance targets have greater incentives to misreport (AICPA 2002). In particular, prior research has linked stock-option–based compensation to greater occurrences of financial misreporting (e.g., Beneish 1999; Burns and Kedia 2006; Efendi, Srivastava, and Swanson 2007). Miles and Snow (1978, 2003) suggest that business strategy impacts reward structures, and prior research provides support for reward structure differences between prospectors and defenders (Ittner et al. 1997; Rajagopalan 1997; Singh and Agrawal
2002).