782
Views
3
CrossRef citations to date
0
Altmetric
Original Articles

The Effect of CEO Stock-Based Compensation on the Pricing of Future Earnings

&
Pages 651-679 | Received 26 Dec 2014, Accepted 20 Mar 2016, Published online: 24 May 2016

References

  • Aboody, D., & Kasznik, R. (2000). CEO stock option awards and the timing of corporate voluntary disclosures. Journal of Accounting and Economics, 29(1), 73–100. doi:10.1016/S0165-4101(00)00014-8
  • Anderson, R. C., Duru, A., & Reeb, D. M. (2009). Founders, heirs, and corporate opacity in the United States. Journal of Financial Economics, 92(2), 205–222. doi:10.1016/j.jfineco.2008.04.006
  • Ayers, B., & Freeman, R. (2003). Evidence that analyst following and institutional ownership accelerate the pricing of future earnings. Review of Accounting Studies, 8(1), 47–67. doi:10.1023/A:1022647822683
  • Baik, B. O. K., Farber, D. B., & Lee, S. A. M. (2011). CEO ability and management earnings forecasts. Contemporary Accounting Research, 28(5), 1645–1668. doi:10.1111/j.1911-3846.2011.01091.x
  • Baker, T., Collins, D., & Reitenga, A. (2003). Stock option compensation and earnings management incentives. Journal of Accounting, Auditing & Finance, 18(4), 557–582. doi:10.1177/0148558 × 0301800408
  • Baker, T., Collins, D., & Reitenga, A. (2009). Incentives and opportunities to manage earnings around option grants. Contemporary Accounting Research, 26(3), 649–672. doi:10.1506/car.26.3.1
  • Barry, C., & Brown, S. (1985). Differential information and security market equilibrium. Journal of Financial and Quantitative Analysis, 20, 407–422. doi:10.2307/2330758
  • Barth, M. E. (2003). Discussion of ‘compensation policy and discretionary disclosure’. Journal of Accounting and Economics, 34(1–3), 311–318. doi:10.1016/S0165-4101(02)00076-9
  • Barth, M. E., Cram, D. P., & Nelson, K. K. (2001). Accruals and the prediction of future cash flows. The Accounting Review, 76(1), 27–58. doi:10.2308/accr.2001.76.1.27
  • Bartov, E., & Mohanram, P. (2004). Private information, earnings manipulations, and executive stock-option exercises. The Accounting Review, 79(4), 889–920. doi:10.2307/4093080
  • Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of Financial Economics, 80(3), 511–529. doi:10.1016/j.jfineco.2004.10.011
  • Botosan, C., Plumlee, M., & Xie, Y. (2004). The role of information precision in determining cost of equity capital. Review of Accounting Studies, 9, 121–137. doi:10.1023/B%3ARAST.0000028188.71604.0a
  • Burns, N., & Kedia, S. (2006). The impact of performance-based compensation on misreporting. Journal of Financial Economics, 79(1), 35–67. doi:10.1016/j.jfineco.2004.12.003
  • Butler, M., Kraft, A., & Weiss, I. S. (2007). The effect of reporting frequency on the timeliness of earnings: The cases of voluntary and mandatory interim reports. Journal of Accounting and Economics, 43(2–3), 181–217. doi:10.1016/j.jacceco.2007.02.001
  • Chen, P., & Zhang, G. (2007). How do accounting variables explain stock price movements? Theory and evidence. Journal of Accounting and Economics, 43(2–3), 219–244. doi:10.1016/j.jacceco.2007.01.001
  • Cheng, Q., & Lo, K. I. N. (2006). Insider trading and voluntary disclosures. Journal of Accounting Research, 44(5), 815–848. doi:10.1111/j.1475-679X.2006.00222.x
  • Cheng, Q., Luo, T., & Yue, H. (2013). Managerial incentives and management forecast precision. The Accounting Review, 88(5), 1575–1602. doi:10.2308/accr-50506
  • Cheng, Q., & Warfield, T. (2005). Equity incentives and earnings management. The Accounting Review, 80(2), 441–476. doi:10.2308/accr.2005.80.2.441
  • Cheng, Q., Warfield, T., & Ye, M. (2011). Equity incentives and earnings management: Evidence from the banking industry. Journal of Accounting, Auditing & Finance, 26(2), 317–349. doi:10.1177/0148558x11401219
  • Choi, J. H., Myers, L., Zang, Y., & Ziebart, D. (2011). Do management EPS forecasts allow returns to reflect future earnings? Implications for the continuation of management's quarterly earnings guidance. Review of Accounting Studies, 26, 143–182. doi: 10.1007/s11142-010-9131-6
  • Chuck, E., Matsumoto, D., & Miller, G. (2013). Assessing methods of identifying management forecasts: CIG vs. researcher collected. Journal of Accounting and Economics, 55, 23–42. doi:10.1016/j.jacceco.2012.07.001
  • Cohen, D. A., Dey, A., & Lys, T. Z. (2008). Real and accrual-based earnings management in the pre- and post-Sarbanes-Oxley periods. The Accounting Review, 83(3), 757–787. doi:10.2308/accr.2008.83.3.757
  • Collins, D. W., Kothari, S. P., Shanken, J., & Sloan, R. (1994). Lack of timeliness and noise as explanations for the low contemporaneous return-earnings association. Journal of Accounting and Economics, 18(3), 289–324. doi:10.1016/0165-4101(94)90024-8
  • Dechow, P. M., Kothari, S. P., & Watts, R. L. (1998). The relation between earnings and cash flows. Journal of Accounting and Economics, 25(2), 133–168. doi:10.1016/S0165-4101(98)00020-2
  • Diamond, D., & Verrecchia, R. (1991). Disclosure, liquidity, and the cost of capital. Journal of Finance, 46, 1325–1360. doi:10.1111/j.1540-6261.1991.tb04620.x
  • Dikolli, S. S., Kulp, S. L., & Sedatole, K. L. (2009). Transient institutional ownership and CEO contracting. The Accounting Review, 84(3), 737–770. doi:10.2308/accr.2009.84.3.737
  • Durnev, A., Morck, R., Yeung, B., & Zarowin, P. (2003). Does greater firm-specific return variation mean more or less informed stock pricing? Journal of Accounting Research, 41(5), 797–836. doi:10.1046/j.1475-679X.2003.00124.x
  • Frydman, C., & Saks, R. E. (2010). Executive compensation: A new view from a long-term perspective, 1936–2005. Review of Financial Studies, 23(5), 2099–2138. doi:10.1093/rfs/hhp120
  • Gelb, D., & Zarowin, P. (2002). Corporate disclosure policy and the informativeness of stock prices. Review of Accounting Studies, 7(1), 33–52. doi:10.1023/A:1017927530007
  • Hall, B. J., & Liebman, J. B. (1998). Are CEOs really paid like bureaucrats? The Quarterly Journal of Economics, 113(3), 653–691. doi:10.1162/003355398555702
  • Hayes, R. M., Lemmon, M., & Qiu, M. (2012). Stock options and managerial incentives for risk taking: Evidence from FAS 123R. Journal of Financial Economics, 105(1), 174–190. doi:10.1016/j.jfineco.2012.01.004
  • Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of Accounting and Economics, 31(1–3), 405–440. doi:10.1016/S0165-4101(01)00018-0
  • Jayaraman, S., & Milbourn, T. T. (2011). The role of stock liquidity in executive compensation. The Accounting Review, 87(2), 537–563. doi:10.2308/accr-10204
  • Jensen, M. C., & Murphy, K. J. (1990). Performance pay and top-management incentives. Journal of Political Economy, 98(2), 225–264. doi: 10.1086/261677
  • Kang, Q., & Liu, Q. (2008). Stock trading, information production, and executive incentives. Journal of Corporate Finance, 14(4), 484–498. doi:10.1016/j.jcorpfin.2008.06.003
  • Kim, M., & Kross, W. (2005). The ability of earnings to predict future operating cash flows has been increasing – not decreasing. Journal of Accounting Research, 43(5), 753–780. doi:10.1111/j.1475-679X.2005.00189.x
  • Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39(1), 163–197. doi:10.1016/j.jacceco.2004.11.002
  • Larcker, D. F., & Rusticus, T. O. (2010). On the use of instrumental variables in accounting research. Journal of Accounting and Economics, 49(3), 186–205. doi:10.1016/j.jacceco.2009.11.004
  • Leuz, C., & Verrecchia, R. (2000). The economic consequences of increased disclosure. Journal of Accounting Research, 38, 91–124. doi:10.2307/2672910
  • Lo, A., Mamaysky, H., & Wang, J. (2004). Asset prices and trading volume under fixed transaction costs. Journal of Political Economy, 112, 1054–1090. doi:10.1086/422565
  • Lundholm, R., & Myers, L. A. (2002). Bringing the future forward: The effect of disclosure on the returns-earnings relation. Journal of Accounting Research, 40(3), 809–839. doi:10.1111/1475-679X.00072
  • McAnally, M. L., Srivastava, A., & Weaver, C. D. (2008). Executive stock options, missed earnings targets, and earnings management. The Accounting Review, 83(1), 185–216. doi:10.2308/accr.2008.83.1.185
  • Nagar, V., Nanda, D., & Wysocki, P. (2003). Discretionary disclosure and stock-based incentives. Journal of Accounting and Economics, 34, 283–309. doi: 10.1016/S0165-4101(02)00075-7
  • Noe, C. F. (1999). Voluntary disclosures and insider transactions. Journal of Accounting and Economics, 27(3), 305–326. doi:10.1016/S0165-4101(99)00014-2
  • Subramanyam, K. R. (1996). The pricing of discretionary accruals. Journal of Accounting and Economics, 22(1–3), 249–281. doi:10.1016/S0165-4101(96)00434-X
  • Trueman, B. (1986). Why do managers voluntarily release earnings forecasts? Journal of Accounting and Economics, 8(1), 53–71. doi:10.1016/0165-4101(86)90010-8
  • Tucker, J. W., & Zarowin, P. A. (2006). Does income smoothing improve earnings informativeness? The Accounting Review, 81(1), 251–270. doi:10.2308/accr.2006.81.1.251
  • Yang, H. I. (2012). Capital market consequences of managers’ voluntary disclosure styles. Journal of Accounting and Economics, 53(1–2), 167–184. doi:10.1016/j.jacceco.2011.08.003
  • Zhang, G. (2000). Accounting information, capital investment decisions, and equity valuation: Theory and empirical implications. Journal of Accounting Research, 38(2), 271–295. doi:10.2307/2672934

Reprints and Corporate Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

To request a reprint or corporate permissions for this article, please click on the relevant link below:

Academic Permissions

Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?

Obtain permissions instantly via Rightslink by clicking on the button below:

If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.