Recent studies in managerial accounting point out that the firms do not fully ratchet up the managers' future performance targets based on their past performance. This study offers a novel theoretical perspective on the firm's executive compensation strategy that supports such latest empirical...

This study builds on the ratchet principle literature and examines the subordinate's incentive to reduce the effort level in target setting procedure. Using the data containing both actual and target performances, we provide direct empirical evidences as to the predictions by the ratchet...

Managerial incentive plans often combine objective measures of performance relative to beginning-of-year targets with ex post subjective evaluations. We argue that one of the roles of subjectivity is to offset the limitations of target-based rewards and strengthen managerial incentives when...

Prior research in management accounting has focused on the pay-performance incentive contracts to examine compensation of top executives. However, the recent economic crisis lessens the validity of the pay-for-performance argument because many executive officers continue to receive a substantial...

We examine factors influencing firms' strategic disclosure of executive pay in Korea. Because the disclosure rules in Korea do not mandate but only recommend that firms distinguish between inside executive directors and outside directors when reporting the average pay of directors, this...

We study manufacturing firms' asymmetric inventory investment in response to sales changes. Focusing on the costs of resource adjustment and stockout which likely differ in sales-increasing and sales-decreasing periods, we predict and find that inventory investment declines less during periods...

We investigate whether managers strategically choose the tone of non-financial information disclosure based on performance and their motivations. We use 14,400 firm-year MD&As of companies listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange from 2008 to 2019. The results show tone...

We examine whether the analysts can identify the managers’ tone management behavior conveyed through the management discussion and analysis section of corporate annual reports. We find that analysts can effectively identify the managers’ upward tone management behavior and lower their...

Previous research analyzes the relationship between corporate social responsibility (CSR) performance and the tone of a single report. Noting that reporting attributes and financial performance may influence managers’ disclosure decisions, we investigate how CSR performance at different...