Cash-based bonus plans as a strategic communication, coordination and commitment mechanism

• 成果类型: Article
• 署名作者: Bushman, Robert
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2021.101447
• 发表日期: 2021
• 关键词: performance-measures; ceo compensation; price; firm; CONTRACTS; schemes; income

摘要

Over the last two decades, executive compensation research has focused primarily on equity-based pay and incentives emanating from executives' firm-specific equity portfo-lios, while generally ignoring cash-based bonus plans as a second order effect. Exploiting access to new data sources, there has been a revival of interest by accounting researchers in more deeply understanding the value adding roles played by bonus plans. Earlier research viewed accounting measures in bonus plans through the lens of effort incentives-risk premium trade-offs derived from classical principal-agent theory. In contrast, the recent literature emphasizes the idea that cash-based bonus plans play an important communication role in which a board's performance measure choices reveal to outsiders the firm's commitment to specific strategic objectives and facilitate the coordination of behavior across executives inside the firm. Public observability of bonus plans then pro-vides a basis for investors and competitors to assess a firm's strategic direction, and for investors to hold managers accountable for strategy execution. Building on my discussion of Bloomfield et al. (2021) in the 2020 Journal of Accounting and Economics Conference, my objective in this paper is to synthesize and critique key results from this recent liter-ature and offer ideas for future research. (c) 2021 Elsevier B.V. All rights reserved.