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Analyst forecasts and target setting in executive annual bonus contracts

Title
Analyst forecasts and target setting in executive annual bonus contracts
Authors
Choi S.Kim S.Kwon S.Shin J.Y.
Ewha Authors
권세원
SCOPUS Author ID
권세원scopus
Issue Date
2021
Journal Title
Journal of Management Accounting Research
ISSN
1049-2127JCR Link
Citation
Journal of Management Accounting Research vol. 33, no. 2, pp. 19 - 42
Keywords
Analyst forecastsAnnual bonusesExecutive compensationForward-looking informationPerformance targets
Publisher
American Accounting Association
Indexed
SCOPUS scopus
Document Type
Article
Abstract
Whereas practitioners often recommend that firms incorporate forward-looking information in setting executive performance targets, academic studies have mainly focused on past information (e.g., past performance) as information sources. Using analysts’ annual earnings forecasts as the main proxy for market-based forward-looking information, we find evidence that boards of S&P 1500 firms exploit forward-looking information in setting targets for executive annual bonus contracts. Furthermore, we find that the positive association between analyst forecasts and firms’ bonus target revisions is more pronounced when forecasts are more informative about future firm performance and when they are less likely to be influenced by managers. Our results are robust to a battery of sensitivity tests. Data Availability: Data are available from the public sources indicated in the text. © 2021, American Accounting Association. All rights reserved.
DOI
10.2308/JMAR-18-075
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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