The Effect of Executive Compensation on Report Lags: An Empirical Evidence

Indrarini Laksmana (), Trung Pham () and Mai Dao ()
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Indrarini Laksmana: Kent State University, USA
Trung Pham: Kent State University, USA
Mai Dao: University of Toledo, USA

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2020, vol. 23, issue 02, 1-35

Abstract: The timeliness of financial reporting has been considered as an important factor that contributes to the well-functioning of an economy. This study extends the contemporary research stream by examining determinants of the timeliness of financial reporting process. Specifically, we investigate whether report lag is influenced by (1) the level of executive compensation; (2) the level of stock-based compensation compared to cash-based compensation, and (3) the level of executive compensation above the expected compensation level. We find that firms have shorter report lag when their level of executive compensation is higher. We also document that firms with more stock-based compensation have shorter financial reporting delays. Finally, firms with executive compensation level above the expected executive compensation are more likely to have shorter report lags. Our study underscores the importance of the type and the level of compensation as determinants of firms’ earnings reporting delays.

Keywords: Executive compensation; report lags; CEO compensation; CFO compensation (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0219091520500113

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