2020年8月11日学术报告通知

发布时间:2020-08-10

内容提要:

We examine the role of accounting information in incentive compensation vis-à-vis its role in valuation. Bushman, Engel and Smith [2006] show that the compensation importance of earnings is related to the valuation importance of earnings. In this study, we seek to understand the congruence between the valuation and incentive roles of accounting at a more general level. We rely on the valuation models of Zhang [2000] and Chen and Zhang [2007]) to identify five factors driving firm value that are conveyed by accounting information, four of which relate to cash flows (earnings, profitability, capital investment, and growth) whereas the fifth to risk (the discount rate). We then empirically explore whether executive compensation reflects these fundamental value drivers (i.e., dimensions of performance), with the following results. First, compensation is positively related to all four cash-flow factors and negatively related to discount rates, suggesting that executive pay is tied to both current earnings and the attributes of operations determining future earnings. Second, in high (versus low) growth firms, compensation is less strongly tied to earnings (as shown in previous studies), but is more tied to capital investment which generates future earnings. Third, across firms, the compensation importance of each of the five factors varies closely with its valuation importance. Overall, using our multi-dimensional performance measure, we find a closer pay-to-performance link than previously documented and a broad alignment that exists between the incentive and valuation uses of accounting information.

会议号:614 729 79711
     会议密码:636823