During the last decade, a surprisingly high percentage of U.S. companies has fulfilled or beaten analysts’ earnings per share forecasts. One of the most frequently cited reasons for this growing tendency is a change in the nature of U.S. executive compensation structure. As stock options have...

We identify 133 firms that between July and December 2002, announced plans to voluntarily adopt the fair value method of accounting for stock-based compensation. We investigate whether such announcements increased the quality of these firms’ earnings as perceived by market participants....

In recent years, literature has suggested that executive compensation schemes conform to principal-agent models of incentive pay. Specifically, when analyzing total compensation (including stock options), executive pay seems to be positively related to the market performance of the corporation's...