This study investigates the effect of market inefficiency on the value relevance of earnings. Many prior studies challenge the efficiency of the stock market, an assumption the value relevance studies build on. With evidence of market inefficiency, it becomes important to understand how the...

We examine boards of directors' subjective adjustments to objective performance measures in executive incentive contracts. Using a unique hand-collected sample of adjusted earnings per share measures used to determine executives' annual bonuses, we provide large-sample evidence that subjective...

This study investigates whether firms revise executive bonus compensation targets based on past performance. Studies in this area suffer from a lack of detailed information related to executive performance targets. Using mandatory disclosures of executive compensation information under the U.S....

We examine the effect of option listing on the stock-price response to quarterly earnings announcements. We find that option trading reduces the magnitude of the pre-earnings announcement drift. We also present evidence that firms with options exhibit more intensive price reactions to earnings...

Some organizations have abandoned traditional annual budgeting and instead use an alternate approach known as Beyond Budgeting (BB). Our study presents the results of an exploratory analysis comparing 80 organizations that have implemented at least some of the BB practices to a group of 121...

Managerial incentive plans often combine objective measures of performance relative to beginning-of-year targets with ex post subjective evaluations. We argue that one of the roles of subjectivity is to offset the limitations of target-based rewards and strengthen managerial incentives when...

A large stream of work on relative performance evaluation highlights the benefits of using information about peer performance in contracting. In contrast, the potential costs of discouraging cooperation among peers have received much less attention. The purpose of our study is to examine how the...