The impact of outcome uncertainty on corporate investment compensation peer effects

Yu-En Lin, Yu-Xin Xu, Bo Yu and Keith S.K. Lam

The North American Journal of Economics and Finance, 2025, vol. 76, issue C

Abstract: This study investigates the compensation peer effect of investments and the moderate effect of outcome uncertainty on the compensation peer effect in the US stock markets. We document two new findings. Our results suggest a significant positive relation between firms’ own and compensation peers’ investments and a significant negative moderate effect of the outcome uncertainty on the relation. In addition, we also find that the moderate effect is more pronounced in the low information accuracy groups, suggesting that the inaccurate information disclosure of compensation peers’ investments is the main cause of the negative moderate effect. Our results remain sound after various robustness and endogenous tests.

Keywords: Outcome uncertainty; Moderate effect; Compensation peer effect; Firms’ own investments (search for similar items in EconPapers)
JEL-codes: D21 G31 M52 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:76:y:2025:i:c:s1062940824002742

DOI: 10.1016/j.najef.2024.102349

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