Accounting performance measures such as earnings and cash flows are useful for both valuation and performance evaluation purposes. However, little evidence exists on whether there is any association between these two roles. In this study, we provide large sample empirical evidence that the...

Accounting performance measures such as earnings and cash flows are useful for both valuation and performance evaluation purposes. However, little evidence exists on whether there is any association between these two roles. In this study, we provide large sample empirical evidence that the...

In this paper we investigate whether selling, general and administrative (SG&A) expenditure (excluding R&D and advertising expenditure) creates a long-lived asset. GAAP requires SG&A expenditure to be expensed immediately as a period cost to recognize using up of economic benefits. We...

This study focuses on the relation between current compensation and past performance measures as signals of a CEO’s ability. We develop a simple two-period principal-agent model with moral hazard and adverse selection and test theoretical predictions using CEO compensation data from 1993-2006....

In this paper we investigate how incentives affect managers’ input resource expenditure decisions and how firms make equity grant decisions considering managerial behavior. Focusing on selling, general and administrative (SG&A) expenditure, we first document that SG&A expenditure creates...