Duration of Executive Compensation

• 成果类型: Article
• 署名作者: Gopalan, Radhakrishnan; Milbourn, Todd; Song, Fenghua; Thakor, Anjan V.
• 署名单位: Washington University (WUSTL); Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12085
• 发表日期: 2014
• 页码: 2777-2817
• 关键词: relative performance evaluation; corporate governance; earnings management; Incentive compensation; managerial incentives; ceo incentives; long-term; STOCK; RISK; pay

摘要

Extensive discussions on the inefficiencies of short-termism in executive compensation notwithstanding, little is known empirically about the extent of such short-termism. We develop a novel measure of executive pay duration that reflects the vesting periods of different pay components, thereby quantifying the extent to which compensation is short-term. We calculate pay duration in various industries and document its correlation with firm characteristics. Pay duration is longer in firms with more growth opportunities, more long-term assets, greater R&D intensity, lower risk, and better recent stock performance. Longer CEO pay duration is negatively related to the extent of earnings-increasing accruals.