TY - JOUR
T1 - Duration of Executive Compensation
AU - Gopalan, Radhakrishnan
AU - Milbourn, Todd
AU - Song, Fenghua
AU - Thakor, Anjan V.
N1 - Publisher Copyright:
© 2014 the American Finance Association.
PY - 2014/12/1
Y1 - 2014/12/1
N2 - 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.
AB - 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.
UR - https://www.scopus.com/pages/publications/84920190867
U2 - 10.1111/jofi.12085
DO - 10.1111/jofi.12085
M3 - Article
AN - SCOPUS:84920190867
SN - 0022-1082
VL - 69
SP - 2777
EP - 2817
JO - The Journal of Finance
JF - The Journal of Finance
IS - 6
ER -