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| Author: | Natarajan, R. |
| Title: | Stewardship value of earnings components: additional evidence on the determinants of executive compensation |
| Journal: | Accounting Review
1996 : JAN, VOL. 71:1, p. 1-22 |
| Index terms: | COMPENSATION EARNINGS EFFICIENCY |
| Language: | eng |
| Abstract: | This paper investigates the role of components of earnings in CEO compensation contracts. It argues that shareholders will use components of earnings as additional performance measures whenever the components provide information, over and above earnings, about managerial decisions. Results indicate that earnings and cash flow measures together have a better association with cash compensation paid to CEOs of US companies than aggregate earnings alone. The evidence also suggests that current accruals and cash flows from operations are aggregated for performance evaluation. |
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