Access the full text.
Sign up today, get DeepDyve free for 14 days.
D. Ciscel, Thomas Carroll (1980)
The Determinants of Executive Salaries: An Econometric SurveyThe Review of Economics and Statistics, 62
Richard Lambert, D. Larcker (1987)
AN ANALYSIS OF THE USE OF ACCOUNTING AND MARKET MEASURES OF PERFORMANCE IN EXECUTIVE-COMPENSATION CONTRACTSJournal of Accounting Research, 25
W. Sharpe (1982)
Factors in New York Stock Exchange security returns, 1931–1979*, 8
Judy Rayburn (1986)
THE ASSOCIATION OF OPERATING CASH FLOW AND ACCRUALS WITH SECURITY RETURNSJournal of Accounting Research, 24
G. Wilson (1986)
THE RELATIVE INFORMATION-CONTENT OF ACCRUALS AND CASH FLOWS - COMBINED EVIDENCE AT THE EARNINGS ANNOUNCEMENT AND ANNUAL-REPORT RELEASE DATEJournal of Accounting Research, 24
Greg Clinch (1991)
Employee Compensation and Firms' Research and Development ActivityJournal of Accounting Research, 29
K. Ely (1991)
Interindustry Differences In The Relation Between Compensation And Firm Performance VariablesJournal of Accounting Research, 29
Bengt Holmstrom (1979)
Moral Hazard and ObservabilityThe Bell Journal of Economics, 10
Gary Biddle, G. Seow (1991)
The Estimation and Determinants of Associations between Returns and Earnings: Evidence from Cross-Industry ComparisonsJournal of Accounting, Auditing & Finance, 6
G. Benston (1985)
The self-serving management hypothesis: Some evidenceJournal of Accounting and Economics, 7
Kevin Murphy (1985)
Corporate performance and managerial remuneration: An empirical analysisJournal of Accounting and Economics, 7
Frøystein Gjesdal (1981)
ACCOUNTING FOR STEWARDSHIPJournal of Accounting Research, 19
Rick Antle, Abbie Smith (1985)
Measuring Executive-Compensation - Methods And An ApplicationJournal of Accounting Research, 23
This study examines the relationship between management compensation, earnings and cash flows. The preponderance of prior research reveals a substantial correlation between total earnings and compensation. However, the popular press indicates that many firms have switched to less traditional methods of awarding executive compensation. For example, Chrysler Corporation now bases substantial compensation on quality control in manufacturing while First Chicago bases compensation on the minimizing of loan losses. Because of their relatively high debt levels in the late 1980s, some firms are stressing cash flows in designing compensation plans. For example, the New York Times 22590, p.29 in Section 3 reports that RJR Nabisco Inc. uses cash flows to compute the bonus pool while The Wall Street Journal 41890, p. R26 indicates that board of directors often dump incomebased fixed compensation formulas in favor of performance goals such as cash flows. From a normative viewpoint, Holmstrom's 1979 analysis suggests that a performance evaluation scheme based on multiple signals is superior to one that is based on a single signal, provided the additional signals incorporate new information. Given these anecdotal reports indicating cashflow based compensation and the implications of existing theory, we explore the role of cash flows and working capital from operations in addition to total reported earnings in determining managerial compensation.
Managerial Finance – Emerald Publishing
Published: Feb 1, 1993
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.