Managerial Risk-Taking Incentives and Non-GAAP Earnings Disclosures
Saint Louis University - Department of Finance
Saint Louis University - Department of Accounting
Saint Louis University
March 26, 2013
Journal of Contemporary Accounting and Economics, Forthcoming
We investigate the association between risk-taking incentives provided by stock-based compensation arrangements and non-GAAP financial disclosures. Controlling for compensation to stock price sensitivity, we find that managers with higher compensation to stock volatility sensitivity (vega) are more likely to be associated with voluntary non-GAAP earnings information disclosures. In addition, higher-vega managers are found to be associated with more frequent and less opportunistic non-GAAP earnings information disclosures. Robust to alternative specifications and estimations, our findings suggest that compensation arrangements can encourage managers to make more, higher-quality voluntary non-GAAP disclosures.
Keywords: Executive Compensation, Risk-Taking, Managerial Incentives, Disclosure Policy, Non-GAAP Earnings
JEL Classification: G30, J33, M4, M52Accepted Paper Series
Date posted: February 26, 2012 ; Last revised: April 3, 2013
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