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| Author: | Indjejikian, R. J. Nanda, D. |
| Title: | Executive Target Bonuses and What They Imply about Performance Standards |
| Journal: | Accounting Review
2002 : OCT, VOL. 77:4, p. 793-820 |
| Index terms: | BONUS SYSTEMS COMPENSATION PERFORMANCE MEASUREMENT STANDARDS |
| Language: | eng |
| Abstract: | The authors provide evidence that CEOs' and lower-level business unit executives' target bonuses are negatively associated with a proxy for measurement noise in accounting-based performance measures, and positively associated with proxies for firms' growth opportunities and the extent of executives' decision-making authority. Non-CEO executives' target bonuses are also positively associated with their CEO's target bonus. In addition, the authors compare executives' actual and target bonuses over two consecutive periods to draw inferences about how firms revise executives' performance standards. If firms adjust performance standards to fully reflect executives' past performance, then the authors expect an executive's chances of earning an above-target bonus to be independent of his past performance. |
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