Abstract
Extensive discussions on the inefficiencies of "short-termism" in executive compensation notwithstanding, little is known empirically about the extent of such short-termism. We develop a novel measure of executive pay duration that reflects the vesting periods of different pay components, thereby quantifying the extent to which compensation is short-term. We calculate pay duration in various industries and document its correlation with firm characteristics. Pay duration is longer in firms with more growth opportunities, more long-term assets, greater R&D intensity, lower risk, and better recent stock performance. Longer CEO pay duration is negatively related to the extent of earnings-increasing accruals.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 2777-2817 |
| Number of pages | 41 |
| Journal | Journal of Finance |
| Volume | 69 |
| Issue number | 6 |
| DOIs | |
| State | Published - Dec 1 2014 |
All Science Journal Classification (ASJC) codes
- Accounting
- Finance
- Economics and Econometrics