Earnings Performance and Discretionary Disclosure

While the influence of earnings performance on disclosure is a fundamental issue in the disclosure literature, our understanding of this influence is limited. In this paper, I examine a comprehensive set of disclosures from a sample of firms experiencing an extended period of seasonally adjusted earnings increases. I study how these firms adjust disclosure in response to earnings increases, how disclosure changes as the period of strong earnings performance nears an end and how firms disclose during a subsequent period of earnings decline. I find an increase in disclosure during the period of increased earnings. This increase is pervasive across all types of disclosure and tends to be bundled with earnings announcements. The market responds positively to this disclosure. Firms continue to disclose at a high level as they approach earnings declines. However, they shift to disclosures that focus on the positive short-term results and do not discuss the impending decreases. While this behavior is systematic, the market does not appear to anticipate the subsequent earnings declines. Once the firms announce earnings declines, the magnitude of disclosure returns to the level provided prior to the increased earnings.     

Observability and Subjective Performance Measurement

Accounting research provides theory and evidence on the choice and use of subjective performance measures for evaluating managerial performance. However, accounting research does not focus on the subjective performance measurement of managerial behaviour once measures have been chosen. We extend accounting research by investigating the factors that influence the subjective performance measurement decision. We predict that the level of subjective performance measurement is influenced by the informativeness of financial performance measures and by the verifiability of the nonfinancial measures in a formula‐based incentive plan. We expect that the measures' informativeness and verifiability depends on the observability of both the managerial behaviour being subjectively measured and the reliability of the financial and nonfinancial performance measures. More specifically, we hypothesize that the influence of the levels of the financial performance measures on the level of subjective performance measurement is moderated by the observability of either the managerial behaviour being measured (for the financial measures) or the performance measures' reliability (for the nonfinancial measures). Data from a firm provide support for our hypotheses.     

商业银行客户经理绩效评价及资金分配体系的探讨

一、目前商业银行中流行的多项业务指标综合评分方法的缺陷 目前,若干商业银行基本建立了基于目标管理的客户经理绩效评价和奖金分配体系,即:按照存、贷款业务、中间业务等制定若干项关键指标,设定各项指标的目标值,有些银行在业务指标之外加入了工作态度、工作效率等软指标,根据业务指标的实际完成情况和工作态度、工作效率等进行打分,并以此分配奖金和营销费用.     

对公立医院绩效奖金分配的探讨

论文分析了医院绩效工资分配的依据,并对医院绩效考核中员工类型的划分,几种绩效考核管理方式进行了比较,最后对绩效奖金分配的改革提出建议,以其对公立医院绩效奖金分配起到帮助作用。     

On Bonus and Bonus Prognoses in Life Insurance

The surplus on a life insurance policy is defined, at any time during the term of the contract, as the difference between the second order retrospective reserve and the first order prospective reserve. General principles for redistribution of the systematic part of the surplus as bonus are formulated, and various special bonus schemes are discussed. Techniques for forecasting future bonuses are worked out in an extended model with stochastic experience basis. Numerical illustrations are provided.     

对分红保险经营业绩影响因素的研究

近年来我国寿险公司的分红保险类产品业务发展迅速，其保费收入已占到寿险总保费收入的50％以上。但分红类保险的保费大量集中于少数几个险种或期限上，一旦没有替代性很强的后续产品，保费收入就会有很大波动，资金流的连续性也会受到影响。保险公司应通过自身的不懈努力，使分红保险能够平稳发展，不断走向成熟。     

Productivity and Performance Indicators in Enterprise Agreements

The design and implementation of performance measurement systems is a major interest of management accountants. In recent years many organisations have made enterprise agreements with their employees, often specijjing performance indicators on which to base wage increases. This paper explains how performance indicators are used in enterprise agreements and considers alternative definitions of indicators and their limitations. It argues that performance indicators in enterprise agreements should be consistent with wider organisational performance measurement systems, particularly those having a strategic focus.     

Bonus schemes and trading activity

Little is known about how different bonus schemes affect traders' propensity to trade and which bonus schemes improve traders' performance. We study the effects of linear versus threshold bonus schemes on traders' behavior. Traders buy and sell shares in an experimental stock market on the basis of fundamental and technical information (past share price evolution, realized earnings, analysts' earnings forecasts, and evolution of the market index). We find that linear and threshold bonus schemes have different effects on trading behavior: traders make more transactions but of a smaller size under the threshold than under the linear bonus scheme. Furthermore, transaction frequency significantly decreases when bonus thresholds are reached but only after building in a safety margin. Under the threshold scheme, the traders' performance is lower (even when there are no transaction costs) than under the linear bonus scheme as a consequence of poorer market timing. This is especially the case when earning money by trading is relatively difficult (i.e., under low profitability conditions). Nevertheless, under low profitability conditions, traders seem to collect more information about the relationships between share price and market returns, earnings, and earnings forecasts, put more effort into understanding those relationships, and thus eventually learn to perform better.     

商业银行绩效考核评价指标体系研究

绩效考评体系在评估银行的目标中扮演着重要角色,成为商业银行在管理机制上推动业务发展的一个核心职能。目前,我国商业银行传统的考核指标体系已不能适应新形势的要求,如何设计出符合我国商业银行发展现状,科学合理反映商业银行整体经营绩效的考核评价体系是本文的中心内容。本文在借鉴国外商业银行的先进经验的基础上,对我国商业银行业绩考核评价指标体系进行分析,针对存在的问题提出了具体建议:转变和创新绩效考评理念、设置科学合理的绩效考评指标、加强绩效考评的战略导向以及采取多样化的激励手段等。     

CEO Ownership and Discretionary Investments

Abstract:  This study investigates empirically the relationship between CEO ownership and discretionary investments such as R&D and capital expenditures. We assert that the under-investment problem is high for R&D-intensive projects, while the over-investment problem is high for capital expenditures because of differences in risk between the two types of investments. Building on the linkages between investments and investment-related agency problems, we hypothesize that the relationship between CEO ownership and investments depends on whether increasing ownership mitigates or exacerbates the under- or over-investment problem. We find a non-linear association between CEO stock ownership and R&D investments; R&D investments increase and then decline across increasing levels of ownership. Further, we find that R&D investments and CEO stock options are positively associated at high levels of option holdings. In contrast, capital expenditures do not vary with CEO ownership (stock or options). Finally, consistent with our underlying assumption, we find that the influence of R&D investments on future firm risk is significantly larger than that of capital expenditures. Our findings indicate that managerial risk aversion affects discretionary investments.     

Discretionary monetary policy and inflation persistence

Rational expectations models of staggered price/wage contracts have failed to replicate the observed persistence in inflation and unemployment during disinflationary periods. The current literature on this persistency puzzle has focused on augmenting the nominal contract model with imperfect credibility and learning. In this paper, I re-examine the persistency puzzle by focusing on the discretionary nature of monetary policy. I show that when the central bank is allowed to re-optimize a quadratic loss function each period, imperfect credibility and learning, even in the absence of staggered contracts, can generate a significant amount of inflation persistence and employment losses during a disinflationary period.     

Highly Valued Equity and Discretionary Accruals

Abstract:  Overvalued equity provides a strong incentive for managers to report earnings that do not disappoint the market (  Jensen, 2005 ). We find that this can be extended to highly valued equity more generally. In the year following the classification as highly valued and compared to firms with less extreme valuations, highly valued firms have significantly higher discretionary accruals and exhibit a more pronounced positive association between discretionary accruals and proxies for the likelihood of failing to meet earnings targets. These findings are consistent with the use of discretionary accruals to manage earnings in support of extreme valuation. Because highly valued equity will likely result in CEOs with valuable stock and stock option portfolios, we test whether and show that the overvalued equity incentive is incremental to a CEO's equity portfolio incentive. One implication is that directors and audit committees should be especially on guard for possible earnings management when a firm has extremely high valuation multiples and when the CEO has a lot of equity at risk.     

Urban Land: Price Indices,Performance, and Leading Indicators

The Journal of Real Estate Finance and Economics - This study had two objectives: first, to evaluate the historical performance of urban land prices across 20 prominent U.S. metro markets; and...     

CFO Fiduciary Responsibilities and Annual Bonus Incentives

We examine how firms design bonus plans of their CFOs. CFOs participate in decision making much like other executives, but they also have significant fiduciary responsibilities for reporting firms' financial results. Responsibility for financial reporting raises the question of whether it is appropriate to pay CFOs annual bonuses contingent on self-reported financial performance. In this paper, we provide a framework that characterizes CFO bonuses as a tradeoff between CFOs' decision-making responsibilities and their fiduciary duties over financial reporting. This framework yields a number of implications that we examine empirically using a proprietary survey of CFO compensation practices of public and private firms. Our main finding shows that from 2003 to 2007 public entities (relative to private entities) reduced the percentage of CFO bonuses contingent on financial performance. We interpret this result as evidence that firms mitigate misreporting practices in part by deemphasizing CFO incentive compensation.     

The Construction and Presentation of Performance Indicators in executive Agency External Reports

For a variety of reasons, factors affecting the understandability and comparability of performance indicators, and perceptions of their status, may differ from those applying in the case of profit-seeking sector financial statements. This study examines the construction and presentation of performance indicators from the perspective of understandability, comparability and perceived importance. It identifies a number of aspects of reporting practice which may undermine these qualities.     

投资项目绩效审计评价指标探讨

近年来,国家加大了基础设施建设力度,投入了大量资金进行交通、通讯、电力、水利等基础设施建设,对城乡居民的生活服务设施进行了新建、改建、扩建。对投资项目的经济效益和社会效益的评价是做好绩效审计的关键。一般地讲,绩效审计评价重点包括投资决策、资金使用、项目管理和投资效益四个方面。本文拟结合投资项目绩效审计实践,对规范绩效审计评价指标作些探讨。一、投资决策评价投资决策评价是对投资项目是否达到预期的社会经济效益及资金使用效益进行评价,揭露形象工程、政绩工程以及挥霍浪费财政性资金等问题,并通过专项调查,从体制层面…     

Elections and Discretionary Accruals: Evidence from 2004

We examine the accrual choices of outsourcing firms with links to U.S. congressional candidates during the 2004 elections, when corporate outsourcing was a major campaign issue. We find that politically connected firms with more extensive outsourcing activities have more income‐decreasing discretionary accruals. Further, relative to adjacent periods, the evidence is concentrated in the two calendar quarters immediately preceding the 2004 election, consistent with heightened incentives for firms to manage earnings during the election season. The incentives can be attributed to donor firms' concerns about the potentially negative consequences of scrutiny over outsourcing for themselves and for their affiliated candidates.     

To Trade or Not to Trade: The Effect of Broker Search and Discretionary Trading on Securities Market Performance

In this article we examine the interaction of brokerage search with the Bayesian learning behavior of competitive dealers under asymmetric information. We particularly focus on the effects of price search and discretionary trading on the performance of a dealer market. A search process is incorporated into a model in which brokers determine their reservation price and whether to continue their trades. The model enables us to uncover the interrelationships among search cost, bid‐ask spread, and price volatility. We show that both spread revision and price volatility are dependent upon the optimal search process, inventory fluctuation, and search cost. Furthermore, our model predicts a negative relationship between price volatility and liquidity trading volume.     

Discretionary disclosure and the market reaction to restatements

This paper presents evidence that management’s disclosure choices related to a restatement are associated with the market reaction at the time the restatement is announced. The two aspects of pre-restatement disclosure choice we examine are the amount of disclosure, hypothesized to reduce information asymmetries, and the tone of disclosure, hypothesized to exacerbate the effect of subsequently-disconfirmed market expectations. Our results provide support for both hypothesized effects, controlling for characteristics that previous research has shown to affect market reaction to restatements—financial attributes of restatements, and concurrent disclosure choices such as prominence of the announcement. We also find that concurrent and prior disclosure characteristics have equivalent and complementary power in explaining market reaction to restatements, while interactive effects indicate that pre-restatement disclosure choices reduce the marginal market impact of concurrent disclosure characteristics.     

Discretionary disclosure,efficiency, and signal informativeness

This paper studies a competitive asset market characterized by an adverse selection problem. The analysis focuses on the link between the market participants’ productive activities and discretionary disclosures. While informed parties’ discretion over disclosure allows them to earn private gains, it leads to an inefficient allocation of resources. A more informative signal makes the informed parties better off, but reduces the uninformed parties’ welfare. Nonetheless, it improves the economy's allocative efficiency. The paper also shows that when the signal quality is endogenous, the informed parties over-invest in the signal informativeness relative to the level that maximizes social welfare.