Journal of Accounting and Economics ( IF 7.293 ) Pub Date : 2021-07-22 , DOI: 10.1016/j.jacceco.2021.101428 Matthew Bloomfield 1 , Brandon Gipper 2 , John D. Kepler 2 , David Tsui 3
Executive bonus plans often incorporate performance measures that exclude particular costs—a practice we refer to as “cost shielding.” We predict that boards use cost shielding to mitigate underinvestment and insulate new managers from the costs of prior executives’ decisions. We find evidence that boards use cost shielding to deter underinvestment in intangibles and encourage managers to take advantage of growth opportunities. We also find that cost shielding tends to be elevated for newly-hired executives, and decreases over tenure. Collectively, our results suggest that boards deliberately choose performance metrics that alleviate agency conflicts.
中文翻译:
高管奖金计划中的成本保护
高管奖金计划通常包含排除特定成本的绩效衡量标准——我们将这种做法称为“成本保护”。我们预测董事会会使用成本保护来减轻投资不足的情况,并使新经理免受先前高管决策的成本影响。我们发现有证据表明董事会使用成本保护来阻止对无形资产的投资不足并鼓励管理者利用增长机会。我们还发现,新聘高管的成本保护往往会提高,并随着任期的增加而降低。总的来说,我们的结果表明,董事会有意选择缓解机构冲突的绩效指标。