Harvey , Shiva Rajgopal , We survey financial executives, and conduct in-depth interviews with an additional 20, to determine the key factors that drive decisions related to reported earnings and voluntary disclosure. The majority of firms view earnings, especially EPS, as the key metric for outsiders, even more so than Abstract - Cited by 17 self - Add to MetaCart We survey financial executives, and conduct in-depth interviews with an additional 20, to determine the key factors that drive decisions related to reported earnings and voluntary disclosure.
The majority of firms view earnings, especially EPS, as the key metric for outsiders, even more so than cash flows. Because of the severe market reaction to missing an earnings target, we find that firms are willing to sacrifice economic value in order to meet a short-run earnings target.
Missing an earnings target or reporting volatile earnings is thought to reduce the predictability of earnings, which in turn reduces stock price because investors and analysts hate uncertainty. We also find that managers make voluntary disclosures to reduce information risk associated with their stock but try to avoid setting a disclosure precedent that will be difficult to maintain.
Capital markets research in accounting by S. Kothari , I review empirical research on the relation between capital markets and financial statements. The principal sources of demand for capital markets research in accounting are fundamental analysis and valuation, tests of market efficiency, and the role of accounting numbers in contracts and the politica Abstract - Cited by 9 self - Add to MetaCart I review empirical research on the relation between capital markets and financial statements.
The principal sources of demand for capital markets research in accounting are fundamental analysis and valuation, tests of market efficiency, and the role of accounting numbers in contracts and the political process.
The capital markets research topics of current interest to researchers include tests of market efficiency with respect to accounting information, fundamental analysis, and value relevance of financial reporting. Evidence from research on these topics is likely to be helpful in capital market investment decisions, accounting standard setting, and corporate financial. Pay me later: Inside debt and its role in managerial compensation. Abstract Many companies pay their executives using inside debt, such as pensions and deferred compensation.
Though these instruments are widely used, their valuation and incentive effects for managers have been almost entirely overlooked by prior research. CEO compensation in most firms exhibits a Abstract - Cited by 27 4 self - Add to MetaCart Abstract Many companies pay their executives using inside debt, such as pensions and deferred compensation.
CEO compensation in most firms exhibits a balance between debt-and equity-based incentives, and the balance systematically shifts away from equity and toward debt as CEOs grow older. CEOs with high debt-based incentives manage their firms conservatively to reduce default risk.
Citation Context Working paper by Daniel A. Cohen, Aiyesha Dey, Thomas Z. This paper investigates the effect of the Sarbanes-Oxley Act hereafter, SOX on the compensation structure and the risk-taking incentives of CEOs as revealed by their research and development expenses and capital expenditures.
We hypothesize that firms will respond to the additional liability impos Abstract - Cited by 19 1 self - Add to MetaCart This paper investigates the effect of the Sarbanes-Oxley Act hereafter, SOX on the compensation structure and the risk-taking incentives of CEOs as revealed by their research and development expenses and capital expenditures. We hypothesize that firms will respond to the additional liability imposed by SOX on corporate executives by altering the mix of incentive compensation to fixed salary awarded to them in order to provide insurance.
Consistent with this claim, we find that there was a significant decline in the ratio of incentive compensation to salary after the passage of SOX. We also hypothesize and find that there was a significant decline in research and development expenses and capital expenditures made by CEOs after the passage of SOX. We interpret the above as evidence of some of the potential costs of this new regulation. We analyze survey responses from nearly tax executives to better understand corporate decisions about real investment location and profit repatriation.
Our evidence indicates that avoiding financial accounting income tax expense is as important as avoiding cash taxes when corporations decide whe Abstract - Cited by 16 2 self - Add to MetaCart We analyze survey responses from nearly tax executives to better understand corporate decisions about real investment location and profit repatriation.
Our evidence indicates that avoiding financial accounting income tax expense is as important as avoiding cash taxes when corporations decide where to locate operations and whether to repatriate foreign earnings. This result is important in light of the recent research about whether financial accounting affects investment and in light of the decades of research on foreign investment that examines cash tax implications but heretofore has not investigated the importance of financial reporting effects.
Our analysis suggests that financial reporting is an important factor to be considered in the policy debates focused on bringing investment to the U. It finds that contract horizon 1 predicts ex … Expand. Evidence from the United States. This paper examines the determinants of stock option introduction as a part of CEO compensation in listed US firms during the period.
The results are consistent with agency costs and … Expand. View 2 excerpts, cites background. Market Misvaluation, Managerial Horizon, and Acquisitions. The main predication is that acquiring firms managed by short-horizon executives have higher abnormal … Expand. Abstract This paper reports evidence that dissident stockholders who wage a proxy contest for board seats typically site poor earnings rather than poor stock price performance as necessitating the … Expand.
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This paper studies the association between a firm's stock returns and subsequent top management changes. Consistent with internal monitoring of management, there is an inverse relation between the … Expand. Journal of Political Economy. This paper studies optimal incentive contracts when workers have career concerns--concerns about the effects of current performance on future compensation. We show that the optimal compensation … Expand. The effect of owner versus management control on the choice of accounting methods.
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One is that the plans reduce the combined tax liability of the corporation and its … Expand. Related Papers. Abstract 1, Citations 26 References Related Papers.
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