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- Publisher
- SAGE
- Copyright
- ©The Author(s) 2021
- ISSN
- 0148-558X
- eISSN
- 2160-4061
- DOI
- 10.1177/0148558X21989907
- Publisher site
- See Article on Publisher Site
Abstract
We examine the relation between CEO pay components and aggressive non-GAAP earnings disclosures using CEO pay components as proxies for managers’ short- versus long-term focus. Specifically, we explore the extent to which short-term bonus plan payouts and long-term incentive plan payouts are associated with: (1) Managers’ propensity to exclude expense items in excess of those excluded by equity analysts; and, (2) The magnitude of those incremental exclusions. We find that long-term incentive plan payouts are negatively associated with the likelihood and magnitude of aggressive non-GAAP exclusions. Our results are consistent with managers reporting non-GAAP information less aggressively when they are more focused on long-term, rather than short-term, value.
Journal
"Journal of Accounting, Auditing & Finance" – SAGE
Published: Jan 1, 2021