Executive compensation influences managerial risk preferences through the executive's portfolio sensitivities to changes in stock prices (delta) and stock return volatility (vega). Large deltas discourage managerial risk-taking, while large vegas encourage risk-taking. Theory suggests that...

We study how compensation committees set CEOs' earnings performance goals in annual incentive plans (AIPs) and their implications for managers' strategic earning guidance behavior. We find corporate boards rely on earnings forecasts provided by both financial analysts and managers in setting...

We study whether accounting information quality (AIQ) is priced in the executive labor market. Focusing on externally hired CEO compensation at their initial appointment, we find a 7.38% pay premium for a one-standard deviation decline in AIQ measured in the years preceding the appointment. This...