Executive Bonus Target Ratcheting: Evidence from the New Executive Compensation Disclosure Rules

• 成果类型: Article
• 署名作者: Kim, Sunyoung; Shin, Jae Yong
• 署名单位: Monash University; Seoul National University (SNU)
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12350
• 发表日期: 2017
• 页码: 1843-1879
• 关键词: earnings management; performance; incentives; INVESTMENT; income; price; INFORMATION; CONTRACTS; schemes; horizon

摘要

This study investigates whether firms revise executive bonus compensation targets based on past performance. Studies in this area suffer from a lack of detailed information related to executive performance targets. Using mandatory disclosures of executive compensation information under the U.S. Securities and Exchange Commission's new disclosure rules, this study provides the first large-sample evidence of bonus target ratcheting. There are three major findings: (i) executive bonus targets ratchet and they ratchet asymmetrically; (ii) the degree of target ratcheting and ratcheting asymmetry vary with executive equity incentives and investment opportunities; and (iii) performance relative to bonus target is serially correlated.