haku: @author Dikolli, S.S. / yhteensä: 3
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| Tekijä: | Dikolli, S.S. Vaysman, I. |
| Otsikko: | Contracting on the stock price and forward-looking performance measures |
| Lehti: | European Accounting Review
2006 : VOL. 15:4, p. 445-464 |
| Asiasana: | performance appraisal stocks prices executives compensation executive remuneration motivation |
| Kieli: | eng |
| Tiivistelmä: | This paper examines the use of earnings (hereafter as: erngs.), forward-looking (here as: fw-lkg.) performance measures (as: prf-msrs.) and stock prices (here as: st-prcs.) in managerial compensation. When the firm's owner (as: owr.) and its manager (as: mgr.) have identical time preferences (as: tm-prefs.), the st-prcs. are not useful for motivating the mgr. (being a noisy aggregation of a fw-lkg. measure and future erngs). In contrast, when the owr. and the mgr. have conflicting tm-prefs., the noisy stock price is useful for contracting. In case the mgr. has no access to banking and cannot trade the firm's shares, the timeliness of the st-prcs. dominate the extra risk imposed by its noise. At the same time, fw-lkg. prf-msrs. can induce a desirable allocation of management effort btw. the short and long term more efficiently than st-prcs. can. Fw-lkg. prf-msrs. and the st-prcs. are thus not direct substitutes in rewarding effort. |
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