| Abstract: | This study examines the association between executive compensation and security analyst forecast dispersion in an agency setting. It is hypothesized that firms that compensate their managers with long-term performance plans and high percentages of managerial stock will be less likely to engage in manipulation of financial statements and their financial performance will be easier to predict, thus resulting in less disperse forecasts. The results provide evidence that firms that compensate their managers with long-term performance plans and higher levels of the company stock have less dispersion associated with their security analyst forecasts and greater dispersion of their long-term growth in earnings. |
