Business unit innovation and the structure of executive compensation

Article Abstract:

A study attempts to establish a relationship between the structure of a division CEO's compensation and the innovative activity that materializes in the division. The compensation is also analyzed to determine if the structure is a function of the division's expected innovation opportunity. A simultaneous equation method is used when considering both the expected innovation opportunity set and the divisional executive's compensation contract as endogenous variables. Results show, to a certain extent, that that proportion of total compensation associated with long-term components are positively related with future innovation.

Compensation and benefits, Economics, Executives, Executive compensation

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Annual bonus schemes and the manipulation of earnings

Article Abstract:

A study utilized confidential data on executive-specific short-term plans to find out the degree of manipulation that executives exert on corporate earnings to achieve the optimum present value of bonus plan payments. An analysis of Paul M. Healy's work on the effect of bonus schemes on accounting decisions showed that the study supported Healy's hypothesis that managers report lower incomes when their bonuses are at a peak. However, the study did not show that managers did the same when their incomes were below bonus-earning levels.

Economic research, Bonuses

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Evaluating the reliability of current value estimates

Article Abstract:

Previous studies have indicated that the decision of companies to capitalize estimates of acquired brand names is mostly affected by contracting incentives, thereby implying that managerial manipulation might play a significant role in such transactions. The possibility of a direct statistical relationship existing between fixed asset revaluations and stock prices in future operating performance conditions is contested since these variables are affected by other economic factors other than revaluation.

Accounting Methods NEC, Brand name products, Brand names, Current value accounting

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