We examine differences in CEO achievement of EPS goals set separately through analyst forecasts and firm bonus plans. Having different goals for the same performance metric enables us to assess their relative importance in incentivizing CEOs. We find CEOs frequently achieve analyst forecasts,...

What informational properties of earnings are demanded by compensation contracting for performance measurement? The answer to this question has important implications for accounting standard setting. While some expect conditional conservatism to be a desirable feature that helps to alleviate...

Equity-based compensation causes increases in firms' share count and dilutes Earnings Per Share (EPS), which provides firms with an incentive to raise EPS using either share buybacks or earnings management. We employ a regression discontinuity framework to provide evidence of a causal link...

We provide empirical evidence that managers smooth earnings using discretionary R&D spending (i.e., real smoothing) when managerial compensation packages contain high risk-taking incentives. Specifically, we find that real smoothing is related to both the sensitivity of executive wealth to a...

This paper investigates whether and how Japanese firms use management earnings forecasts as a performance target for determining executive cash compensation. Consistent with the implications of the agency theory, we find that the sensitivity of executive cash compensation varies with the extent...

This paper examines whether CEO stock-based compensation has an effect on the market's ability to predict future earnings. When stock-based compensation motivates managers to share their private information with shareholders, it will expedite the pricing of future earnings in current stock...

Using a regulation that increased portfolio disclosure frequency of US mutual funds as an exogenous shock shortening funds’ investment horizon, we find that affected funds influence portfolio firms to reduce the pay duration of their executives to incentivize them to also have shorter...