The main purpose of this paper is to explore the empirical evidence supporting the use of relative performance evaluation (RPE) in executive compensation which is mixed. This is puzzling since studies of firm disclosures indicate that firms claim to use RPE based on both accounting measures and...

There are methods to match value added approaches (Residual Income Method, RIM and Economic Value Added, EVA) with discounted cash flow methods, DCF. In this note we use a real life case from an emerging country to illustrate the matching, with complexities such as unpaid taxes, losses carried...

We examine changes in firms' discretionary accounting accruals around the commencement of activism by hedge funds. We argue that hedge funds have the potential to provide increased monitoring of earnings management behavior and we predict and find empirically that average discretionary accruals...

Previous studies of relative performance evaluation (RPE) for executive compensations in Western developed markets have produced mixed findings. This is partly because the dispersion of share ownership in Western capital markets does not closely correspond with the single-principal/multi-agent...

In this paper we propose an analytical solution to the circularity problem between value and cost of capital. Our solution is derived starting from a central principle of finance that relates value today to value, cash flow, and the discount rate for next period. We derive a general formulation...

Option grant vesting terms are a contractual provision that is shaped by accounting standards and other economic factors. We examine the effect of accounting standards, specifically SFAS 123(R), on the vesting terms of stock option grants while also modeling other economic determinants of this...

We examine whether greater transparency leads to improved evaluation and rewarding of management. We posit that disclosure improves board effectiveness at monitoring executives and in strengthening the link between pay and performance. We use management guidance as our empirical proxy for...

I review evidence produced by prior literature on CEO horizon problems and show that prior empirical findings are correlated with the research design employed. I find that evidence of R&D curtailment by CEOs as they approach retirement stems predominantly from cross-sectional correlations...

This paper examines the role of certain fair value accounting (FVA) outcomes in compensation of US bank CEOs. The use of FVA in compensation invites an agency cost - the clawback problem - if cash compensation is based on unrealized profits that may reverse in the future. At the same time FVA...

In my paper, I have managed to achieve full convergence of the results of valuation executed by four methods (CCF, APV, DCF and CFE), provided that cash flow is generated throughout the year (Mid-Year Convention). I have shown that convergence among all methods can be achieved whether we use the...