This study provides the first systematic examination of the compensation contracting relevance of sales revenue. We document an increasing temporal trend in the explicit use of sales revenue as a performance measure in CEO annual bonus contracts, which is mirrored by a similar increase in the...

Recent research shows that matching between contemporaneous revenues and expenses has declined over the past 40 years. We argue that this decline in matching reduces the contracting usefulness of earnings and affects managerial effort allocation and performance measure choice. Based on a...

Survey evidence reveals that managers prefer to avoid dilution of earnings per share (EPS), though financial theory suggests it is irrelevant in firm valuation. We explore contracting and behavioral explanations for this apparent paradox using a large sample of debt-equity issuers. We first...