CEO and CFO Career Penalties to Missing Quarterly Analysts Forecasts
42 Pages Posted: 29 Jun 2008 Last revised: 12 Aug 2012
Date Written: August 10, 2012
This study examines whether the board of directors penalizes CEOs and CFOs in the form of bonus cuts, fewer equity grants, and forced turnover for the act of barely missing the latest consensus analyst forecast and whether such penalties are consistent with efficient contracting or fixation. We find that CEOs are penalized when they just miss the latest consensus analyst forecast via bonus cuts, fewer equity grants, and forced turnover. CFOs are also penalized for just missing the latest consensus analyst forecast via bonus cuts and forced turnover, but do not appear to be penalized with fewer equity grants. Further, we find evidence suggesting that the penalties levied by the board for just missing the latest analyst forecast are more consistent with fixation than efficient contracting.
JEL Classification: G29, J33, G34, M41, M45, G38
Suggested Citation: Suggested Citation