Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance

The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance Boards of directors often implement long-term performance plans (LTPP) to focus management's attention on enhancing long-term shareholder value instead of concentrating their efforts on short-term earnings. This study provides estimation results suggesting that firms that compensate managers with LTPP are associated with lower levels of managed earnings than firms that have only short-term bonus plans. In addition, we find evidence that suggests that firms with long-term performance plans have significantly higher annual returns than firms that have only short-term bonus plans. We also find that firms with long-term performance plans are typically larger firms with smaller managerial ownership and larger institutional ownership than firms without long-term performance plans. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance

Download PDF
23 pages

Loading next page...
 
/lp/springer-journals/the-influence-of-long-term-performance-plans-on-earnings-management-yZqkPwbWwH

References (29)

Publisher
Springer Journals
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
DOI
10.1023/A:1014517102230
Publisher site
See Article on Publisher Site

Abstract

Boards of directors often implement long-term performance plans (LTPP) to focus management's attention on enhancing long-term shareholder value instead of concentrating their efforts on short-term earnings. This study provides estimation results suggesting that firms that compensate managers with LTPP are associated with lower levels of managed earnings than firms that have only short-term bonus plans. In addition, we find evidence that suggests that firms with long-term performance plans have significantly higher annual returns than firms that have only short-term bonus plans. We also find that firms with long-term performance plans are typically larger firms with smaller managerial ownership and larger institutional ownership than firms without long-term performance plans.

Journal

Review of Quantitative Finance and Accounting – Springer Journals

Published: Oct 13, 2004

There are no references for this article.