<scp>CEO</scp> compensation convexity and meeting‐or‐just‐beat earnings forecast-Reference-Cited by-同舟云学术

CEO compensation convexity and meeting‐or‐just‐beat earnings forecast

Published:2024-04-10 Issue: Volume: Page:
ISSN:0810-5391
Container-title:Accounting & Finance
language:en
Short-container-title:Accounting & Finance

Author:

Bartov Eli¹,Chan Wilson Wai Ho²,Cheng Hua³^ORCID,Hu Gang²,Zhao Jingran²^ORCID

Affiliation:

1. Leonard N. Stern School of Business New York University New York New York USA

2. The School of Accounting and Finance The Hong Kong Polytechnic University Hong Kong China

3. School of Finance Nankai University Tianjin China

Abstract

AbstractA line of research documents that corporate executives' compensation convexity relates to earnings management, the issuance of management earnings forecasts and firms' investing and financing decisions. Another stream of research demonstrates that executives manage earnings expectations downward to beatable levels. We bridge these lines of research by investigating how CEO compensation convexity affects expectation management, an important earnings reporting strategy. We hypothesise and find that compensation convexity plays an important role in inducing CEOs to adopt a meet‐or‐just‐beat earnings reporting strategy, which is implemented by downward expectation management.

Publisher

Wiley

Link

https://onlinelibrary.wiley.com/doi/pdf/10.1111/acfi.13253

Reference61 articles.

1. Peer choice in CEO compensation

2. Amadeus M.&Sadka R.(2015)Executive compensation convexity and firm crash risk. Working paper Boston College.

3. The relation between equity incentives and misreporting: The role of risk-taking incentives

4. Earnings management or forecast guidance to meet analyst expectations?

5. The Role of Executive Risk-Taking Incentives in Voluntary Disclosure Accuracy