Document Type
Article
Journal Title
Journal of Accounting and Finance
Publication Date
2014
Abstract
Very often, firms report earnings that meet or beat market expectation (MBE). In this study, we empirically document that managers are rewarded more cash bonus when their firm MBE more often, and this relation holds same regardless of the extent of managerial entrenchment. We find that stock market reacts positively overall when firms MBE, but it reacts less positively for firms with entrenched managers. The study shows that stock market is more sophisticated in rewarding firms for meeting or beating market expectation than a firm's cash bonus system does.
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Recommended Citation
Wang, Weishen, Mark Pyles, and Rachel Graefe-Anderson. “Rewards to Meet Market Expectations: Evidence of Stock Market Sophistication.” Journal of Accounting and Finance 14, no. 1 (2014): 174-185.
Included in
Business Administration, Management, and Operations Commons, Corporate Finance Commons, Finance and Financial Management Commons