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Full-Text Articles in Business
Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang
Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang
Research Collection School Of Accountancy
We examine how executives' ability to control their firms' exposure to risk affects the design of their incentive-compensation contracts. Our natural experimental evidence shows that exchange-traded weather derivatives allow executives to control their firms' exposure to weather risk. Once these derivatives became available, those executives who use them to hedge experience relative reductions in their total compensation and equity incentives. The decline in compensation is consistent with a reduction in the risk premium that executives receive for exposure to weather risk. The decline in equity incentives is consistent with the relation between risk and incentives shifting in a complementary direction …
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae B. Kim
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae B. Kim
Research Collection School Of Accountancy
Given the adverse effect on their welfare, managers are reluctant to disclose bad news in a timely fashion. We examine the effect of managers' pay duration on firms' voluntary disclosures of bad news. Pay duration refers to the average period that it takes for managers' annual compensation to vest. We hypothesize and find that pay durations can incentivize managers to provide more bad news earnings forecasts. This result holds after controlling for the endogeneity of pay duration. In addition, we find that the effect of pay duration is more pronounced for firms with weaker governance and with poorer information environments, …
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Research Collection School Of Accountancy
In this paper, we examine the effect of managers’ pay duration on firms’ voluntary disclosures. Pay duration refers to the average period that it takes for managers’ annual compensation to vest. We hypothesize and find that pay duration can incentivize managers to provide more bad news earnings forecasts. This result holds after controlling for the level of stock-based compensation and the endogeneity of pay duration. In addition, we find that the effect of pay duration is more pronounced for firms with weaker governance and for firms with a more opaque information environment, where the marginal benefits of additional disclosures are …
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Research Collection School Of Accountancy
In this paper, we examine the effect of managers’ pay duration on firms’ voluntary disclosures. Pay duration refers to the average period that it takes for managers’ annual compensation to vest. We hypothesize and find that pay duration can incentivize managers to provide more bad news earnings forecasts. This result holds after controlling for the level of stock-based compensation and the endogeneity of pay duration. In addition, we find that the effect of pay duration is more pronounced for firms with weaker governance and for firms with a more opaque information environment, where the marginal benefits of additional disclosures are …
Executive Compensation And Regulation Imposed Governance: Evidence From The California Non-Profit Integrity Act (2004), Sandip Dhole, Saleha B. Khumawala, Sagarika Mishra, Tharindra Ranasinghe
Executive Compensation And Regulation Imposed Governance: Evidence From The California Non-Profit Integrity Act (2004), Sandip Dhole, Saleha B. Khumawala, Sagarika Mishra, Tharindra Ranasinghe
Research Collection School Of Accountancy
This study examines the impact of the California Nonprofit Integrity Act of 2004 on CEO compensation costs in affected organizations. Contrary to the stated objective of the Act that executive compensation is “just and reasonable,” we find that CEO compensation costs for affected nonprofits during the post-regulation periods have increased by about 6.3 percent when compared with a control group of comparable unaffected nonprofits. In addition, the relative increase in CEO compensation appears to come from nonprofits that have experienced greater regulatory cost increases. We do not find evidence that the Act resulted in a change in CEO pay performance …
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae Bum Kim
Research Collection School Of Accountancy
In this paper, we examine the effect of managers’ pay duration on firms’ voluntary disclosures. Pay duration refers to the average period that it takes for managers’ annual compensation to vest. We hypothesize and find that pay duration can incentivize managers to provide more bad news earnings forecasts. This result holds after controlling for the level of stock-based compensation and the endogeneity of pay duration. In addition, we find that the effect of pay duration is more pronounced for firms with weaker governance and for firms with a more opaque information environment, where the marginal benefits of additional disclosures are …
A Survey Of Executive Compensation Contracts In China’S Listed Companies, Yubo Li, Fang Lou, Jiwei Wang, Hongqi Yuan
A Survey Of Executive Compensation Contracts In China’S Listed Companies, Yubo Li, Fang Lou, Jiwei Wang, Hongqi Yuan
Research Collection School Of Accountancy
We analyze 228 executive compensation contracts voluntarily disclosed by Chinese listed firms and find that central-government-controlled companies disclose more information in executive compensation contracts than local-government-controlled and non-government-controlled companies. Cash-based payments are the main form of executive compensation, whereas equity-based payments are seldom used by Chinese listed companies. On average, there are no significant differences in the value of basic salaries and performance-based compensation in executive compensation contracts. But, compared with their counterparts in non-government-controlled companies, executives in government-controlled companies are given more incentive compensation. Accounting earnings are typically used in executive compensation contracts, with few firms using stock returns …
Executive Equity Compensation And Earnings Management: A Quantile Regression Approach, Chih-Ying Chen, Ming-Yuan Li
Executive Equity Compensation And Earnings Management: A Quantile Regression Approach, Chih-Ying Chen, Ming-Yuan Li
Research Collection School Of Accountancy
Prior research has investigated the association between executive equity compensation and earnings management but the evidence is not conclusive. We investigate this question using the quantile regression approach which allows the coefficient on the independent variable (equity compensation) to shift across the distribution of the dependent variable (earnings management). Based on a sample of 18,203 U.S. non-financial firm-year observations from 1995 to 2008, we find that chief executive officer (CEO) equity compensation is positively associated with the absolute value of discretionary accruals at all quantiles of absolute discretionary accruals, but the association becomes weaker as the quantile decreases. The association …
Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee
Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee
Research Collection School Of Accountancy
This paper investigates the role of management earnings forecasts in mitigating information asymmetry between investors andmanagers relating to moral hazard, and explains how earnings guidance facilitates monitoring. I demonstrate that firms that are more susceptible to moral hazard problems and more difficult to monitor are also more likely to issue annual earningsforecasts and they do so more frequently. In addition, I examine how firm internal governance drives forecasting decisions andshow that stronger board governance and managerial equity incentives are associated with higher likelihood and frequency of forecast issuance. Finally, I provide robust evidence that managerial equity incentives are associated with …