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The Economics of Earnings Manipulation and Managerial Compensation
Crocker, Keith J. - 2006
This paper examines managerial compensation in an environment where managers may take a hidden action that affects the … contract in this setting, and demonstrate that contracts contingent on reported earnings cannot provide managers with the …
Persistent link: https://www.econbiz.de/10012466016
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Pay for Short-Term Performance : Executive Compensation in Speculative Markets
Bolton, Patrick - 2006
We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with...
Persistent link: https://www.econbiz.de/10012466561
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Executive Compensation and Short-termist Behavior in Speculative Markets
Bolton, Patrick - 2003
incentive to induce managers to pursue actions which increase the speculative component in the stock price. Our model provides a …
Persistent link: https://www.econbiz.de/10012468976
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How do Quasi-Random Option Grants Affect CEO Risk-Taking?
Shue, Kelly - 2017
We examine how an increase in stock option grants affects CEO risk-taking. The overall net effect of option grants is theoretically ambiguous for risk-averse CEOs. To overcome the endogeneity of option grants, we exploit institutional features of multi-year compensation plans, which generate two...
Persistent link: https://www.econbiz.de/10012455590
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Growth through Rigidity : An Explanation for the Rise in CEO Pay
Shue, Kelly - 2016
The dramatic rise in CEO compensation during the 1990s and early 2000s is a longstanding puzzle. In this paper, we show that much of the rise can be explained by a tendency of firms to grant the same number of options each year. Number-rigidity implies that the grant-date value of option awards...
Persistent link: https://www.econbiz.de/10012456699
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Equity Vesting and Managerial Myopia
Edmans, Alex - 2013
This paper links the impending vesting of CEO equity to reductions in real investment. Existing studies measure the manager's short-term concerns using the sensitivity of his equity to the stock price. However, in myopia theories, the driver of short-termism is not the magnitude of incentives...
Persistent link: https://www.econbiz.de/10012459254
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Unethical Culture, Suspect CEOs and Corporate Misbehavior
Biggerstaff, Lee - 2013
We show that firms with CEOs who personally benefitted from options backdating were more likely to engage in other forms of corporate misbehavior, suggestive of an unethical corporate culture. These firms were more likely to overstate firm profitability and to engage in less profitable...
Persistent link: https://www.econbiz.de/10012459399
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Lucky Directors
Bebchuk, Lucian A. - 2006
While prior empirical work and much public attention have focused on the opportunistic timing of executives' grants, we provide in this paper evidence that outside directors' option grants have also been favorably timed to an extent that cannot be fully explained by sheer luck. Examining events...
Persistent link: https://www.econbiz.de/10012465848
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Lucky CEOs
Bebchuk, Lucian A. - 2006
We study the relation between corporate governance and opportunistic timing of CEO option grants via backdating or otherwise. Our methodology focuses on how grant date prices rank within the price distribution of the grant month. During 1996-2005, about 12% of firms provided one or more lucky...
Persistent link: https://www.econbiz.de/10012465890
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Earnings Manipulation and Managerial Investment Decisions : Evidence from Sponsored Pension Plans
Bergstresser, Daniel - 2004
Managers appear to manipulate firm earnings when they characterize pension assets to capital markets and alter … earnings to the assumed long-term rate of return on pension assets. Managers are more aggressive with assumed long-term rates … of return when their assumptions have a greater impact on reported earnings. Managers also increase assumed rates of …
Persistent link: https://www.econbiz.de/10012468150