Abstract

The results show that the budget-based compensation creates incentives for managers to select accounting decisions to maximize the value of the bonus. The results of this study support some previous research literature, especially the ratchet-principles. Research in the bonus scheme accounting manager's decision is at to test the bonus scheme in accounting decisions from the perspective of literature and ratchet rachet principles hypotheses targets. The sample used is a company which reveal salaries and bonuses of corporate managers. Samples collected 100 companies that publishes an annual report for the year 2010-2013. This research using independent samples t-test and paired sample t-test. The results show that the budget-based compensation creates incentives for managers to select accounting decisions to maximize the value of the bonus. The results of this study support some previous research literature, especially the ratchet-principles.