Some prominent policy makers are convinced that incentives for short-termism were a major contributor to the crisis. For example, the US Government’s Financial Crisis Inquiry Commission asserts the following: Compensation systems … too often rewarded the quick deal, the short-term gain–without ...
Of late, concern has been expressed that American managers tend to make decisions that yield short‐term gains at the expense of the long‐term interests of the shareholders. In this paper, we have attempted to investigate managerial incentives for such decisions. We find that, when the manager...
This review examines the incentives of managers to use investment choices as a tool for building their personal reputations or the reputation of their firms. These incentives come in three main forms: visibility bias, which encourages a manager to try to make short-term indicators of success look...
6. Performance Incentives and Accountability Managerial accounting facilitates the implementation ofperformance measurementsystems, which can be used as a basis for incentive programs and employee accountability. By linking performance metrics to rewards and recognition, businesses can motivate employees to achi...
Moreover, a number of academic studies indicate that managerial compensation is closely correlated to the profits generated for the firm. Thus, managers themselves have strong financial incentives to seek profit maximization for their firms. Before arriving at the decision whether to maximize profits ...
We study conference calls as a voluntary disclosure channel and create a proxy for the time horizon that senior executives emphasize in their communications. We find that our measure of disclosure time horizon is associated with capital market pressures and executives' short-term monetary incentives. ...
They shed light on why some firms heavily rely on unexpected, weak monetary incentives by focusing on the role of wage-irrelevant goals in the workplace. Recently, Kim and Nguyen (2022a, b) investigate the corporate debt financing of small and medium-sized enterprises (SMEs) in relation to ...
Managerial incentives and risk-taking J. Financ. Econ. (2006) Daniel W. Collins et al. An analysis of intertemporal and cross-sectional determinants of earnings response coefficients J. Account. Econ. (1989) Cláudia Custódio et al. Why are us firms using more short-term debt? J. Financ....
When decisions at different points in time are allowed, the question arises what conditions guarantee the absence of incentives to deviate from the ex ante optimal policy at later dates. We term such a policy time consistent. A well-known result states that additively separable objective functions...
In this paper, we have attempted to investigate managerial incentives for such decisions. We find that, when the manager has private information regarding his or her decisions, there exist situations wherein the manager has incentives to make decisions which yield short‐term profits but are not ...