We investigate the effects of missing quarterly earnings benchmarks on the CEO's annual bonus. After controlling for the general pay-for-performance relation, we find a significant incremental adverse effect on CEO annual cash bonuses when the firm's quarterly earnings fall short of the...

Previous studies document that publicly traded firms report more small increases in earnings than small decreases in earnings and long strings of consecutive earnings increases. Although the two earnings properties have been partially attributed to earnings management, there is little consensus...

Research in incentives has focused on performance measures and pay-performance sensitivities but has largely ignored a third significant dimension: the performance standard. Performance standards generate important incentives whenever plan participants can influence the standard-setting process....

This study investigates whether the form of ownership in the life insurance industry (i.e., public, private or mutual) affects the pursuit of capital, earnings, and tax management goals between 1975 and 1991. Results indicate that differences resulting from ownership structure are most...

We develop a model that explains why the manager of a firm may smooth reported earnings by reducing its variability through time. Greater earnings volatility leads to a bigger informational advantage for informed investors over uninformed investors. If a sufficient number of current shareholders...

We investigate whether CEOs manage the timing of their voluntary disclosures around stock option awards. We conjecture that CEOs manage investors' expectations around award dates by delaying good news and rushing forward bad news. For a sample of 2,039 CEO option awards by 572 firms with fixed...

Prior research has demonstrated that in companies with low managerial ownership managers exploit the latitude available in generally accepted accounting principles to alleviate contractual constraints, presumably to ensure job preservation (annual salary) and maximize incentive compensation...

This paper addresses two questions. First, do corporate governance mechanisms that have been shown to affect firm behavior in other contexts also affect the degree to which firms advantageously manage their reported financial performance? Second, does past research investigating the impact of...

This paper finds that CEO stock options influence the choice, amount, and timing of funds distributed as a buyback. These results support two research expectations - that buybacks impose option-induced agency costs on outside shareholders, and that managers benefit from weak governance and...

This study examines the association between CFOs' equity incentives and earnings management. CEOs' equity incentives have been shown to be associated with accruals management, beating earnings benchmarks, and earnings restatements (Bergstresser and Philippon, 2006; Cheng and Warfield, 2005; McAnally et...