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SHORT‐TERM BONUS PLAN ADOPTION AND STOCK MARKET PERFORMANCE—PROXY AND INDUSTRY EFFECTS: A NOTE
Author(s) -
Tehranian Hassan,
Waegelein James F.
Publication year - 1986
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1986.tb01129.x
Subject(s) - proxy (statistics) , stock (firearms) , executive compensation , earnings , business , term (time) , stock price , compensation (psychology) , stock market , economics , monetary economics , accounting , finance , psychology , corporate governance , computer science , mechanical engineering , paleontology , physics , quantum mechanics , machine learning , series (stratigraphy) , psychoanalysis , engineering , biology , horse
This note extends previous studies and further examines the market reaction to short‐term executive compensation plan introduction by using a larger sample and controling for proxy and industry effects. Results indicate significantly positive abnormal returns not due to proxy or industry effects in the four months before adoption and the month of adoption. The price adjustment is not instantaneous. Firms adopting short‐term compensation plans also experience significantly positive abnormal returns ten months after announcement, associated with positive unexpected earnings in that month.