Abstract
This paper links the CEO's concerns for the current stock price to reductions in real investment. We identify short-term concerns using the amount of stock and options scheduled to vest in a given quarter.Vesting equity is associated with a decline in the growth of research and development and capital expenditure, positive analyst forecast revisions, and positive earnings guidance, within the same quarter. More broadly, by introducing a measure of incentives that is determined by equity grants made several years prior, and thus unlikely driven by current investment opportunities, we provide evidence that CEO contracts affect real decisions.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 2229-2271 |
| Number of pages | 43 |
| Journal | Review of Financial Studies |
| Volume | 30 |
| Issue number | 7 |
| DOIs | |
| State | Published - Jul 1 2017 |
| Externally published | Yes |
Bibliographical note
Publisher Copyright:© The Author 2017.