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다국어 초록 (Multilingual Abstract)

We examine the use of accounting information, in particular earnings, as performance measures in executive compensation contracts. This study is partly motivated by the argument that the usefulness of accounting information has declined in recent years (Lev and Gu 2016; Lev 2018). Such argument is often supported by empirical evidence of declines in the relation between stock returns and earnings (i.e., value relevance) in recent years. However, value relevance does not tell whether the usefulness of accounting information in contracts has also decreased. This is an important issue given the extensive use of accounting information in firms’ contracts, such as debt contracts and executive compensation contracts. To test whether the usefulness of accounting information in executive compensation contracts has declined, we examine the time-series changes in the use of accounting information in CEO’s bonus contracts in the U.S. Specifically, we obtain the detailed data on CEOs’ annual bonus contracts from Incentive Lab, including specific performance measures used in determining annual bonus. We use 11,331 firm-years for the 2006-2019 period for our empirical analyses. We intend to provide descriptive evidence on the types of specific performance measures used on CEOs’ bonus contracts. We are particularly interested in providing evidence on the time-series changes in the use of performance measures in bonus contracts. The empirical findings can be summarized as follows. First, we document that the proportion of bonus in total compensation (e.g., 26% on average) has not changed significantly during the sample period, which suggests that annual bonus provides important incentives to top executives (Guay et al. 2019). Second, when we classify performance measures used in bonus contracts into accounting, stock price, and other information, we find that almost all firms (i.e., 98.6%) use accounting performance measures in CEOs’ annual bonus contracts. We also note that the proportion of firms using stock prices is very low at 1.7%. Third, over 90% of the contracts use some forms of earnings as performance measures, and the proportion of firms using earnings in bonus contracts has not substantially changed during the sample period. The proportion of firms using sales or cash flows as a performance measure has increased steadily. Fourth, when we classify earnings-related measures into six categories based on specific items on the income statement, we find that the use of EPS (earnings per share) or net income has declined sharply, whereas the use of EBITDA (earnings before interest, taxes, depreciation, and amortization) has tripled during the period. Fifth, we estimate the logistic regression to examine whether there are significant time-series changes in the use of individual performance measures in bonus contracts. We define a variable to measure the time trend, and we control for firm- and manager-specific characteristics in the model. Empirical results from the logistic regressions indicate that the use of sales and EBITDA has increased significantly during the sample period, while the use of EPS and net income has declined significantly. These results are generally consistent with the time-series patterns observed from the annual means. In additional tests, we examine time-series variations in the performance measures used in performance-vesting stock grants. We find that accounting information is widely used for performance-vesting stock grants, which is also observed for cash-based bonus pay. In terms of time-series changes, we find that the use of EPS has declined, while the use of other earnings (e.g., ROE (return on equity)) and EBITDA has increased during the sample period. We also examine the time-series variation in the performance measures used in cash bonuses based on the “relative” performance evaluation. The proportion of firms using accounting information is around 59%, while the proportion of firms us...

국문 초록 (Abstract)

본 연구는 미국 상장기업의 경영자 보상에 관한 구체적인 자료를 이용하여, 회계정보, 특히 이익이 최고경영자 보상계약에서 성과지표 로 어떻게 사용되는지 분석한다. 2006-2019년 기간 동안 ...

본 연구는 미국 상장기업의 경영자 보상에 관한 구체적인 자료를 이용하여, 회계정보, 특히 이익이 최고경영자 보상계약에서 성과지표 로 어떻게 사용되는지 분석한다. 2006-2019년 기간 동안 11,331 회사-연도 관측치를 분석한 결과, 거의 모든 기업이 보너스 계약에서 회계성과 지표를 사용하고 있었으며, 90% 이상의 기업이 이익을 성과지표의 하나로 사용하고 있었다. 이익이 보너스 계약의 성과지표로 사용되는 비중 은 표본기간 중 큰 변동이 없었으나, 매출액을 성과지표로 사용하는 비중은 꾸준히 증가하였다. 이익을 세부항목으로 분류하여 분석한 결과, EPS 또는 당기순이익 등 최종이익이 성과지표로 사용되는 비중이 표본기간 중 크게 감소한 반면, EBITDA의 사용빈도는 세 배 이상 증가하였 다. 반면, 세전이익이나EBIT가 성과지표로 사용되는 비중은 큰 변화가 없었다. 추가분석에서는 성과연동형 양도제한부 주식보상과 상대평 가제도에 기반한 보너스 계약에서 사용되는 성과지표의 시계열적 변화를 검토하였으며, 금융 및 비금융기업이 사용하는 성과지표의 차이도 분석하였다. 본 연구는 최고경영자의 보너스 계약에서 회계정보가 성과지표로써 활용되는 구체적인 행태에 대한 기술적인(descriptive) 분석 결과를 제시함으로써, 최근의 회의적 시각에도 불구하고, 회계정보가 경영자의 성과평가와 보상에 유용한 정보를 제공한다는 결과를 제시한 다. 또한, 성과지표로 사용되는 이익을 세분하여 최근10여 년간 시계열적 변화를 분석함으로써, 실무와 학계, 규제기관에 유의미한 시사점을 제공한다.

참고문헌 (Reference)

1 김유진 ; 안정인 ; 서윤석, "회계성과와 시장성과의 상대적 정보성이 이익반응계수 및경영자 보상에 미치는 영향- 외국인 및 국내 기관투자자별 차이 분석 -" 한국경영학회 47 (47): 963-989, 2018

2 이용훈 ; 홍철규, "회계 성과가 경영자 보상에 미치는 영향" 한국회계학회 23 (23): 229-266, 2014

3 이미주 ; 유해양 ; 황인태, "임원보수와 기업성과" 한국경영학회 49 (49): 523-557, 2020

4 홍철규, "경영진 보상에서 재무성과 정보성의 역할: 시장차이를 통한 분석" 한국회계학회 21 (21): 325-347, 2012

5 Drake, K, "The weight on earnings in incentive contracting: Dynamic response or status quo?" 2021

6 Curtis, A., "The use of adjusted earnings in performance evaluation" 26 (26): 1290-1322, 2021

7 Guay, W., "The role of executive cash bonuses in providing individual and team incentives" 133 (133): 441-471, 2019

8 Cadman, B., "The incentives of compensation consultants and CEO pay" 49 (49): 263-280, 2010

9 Lev, B, "The end of accounting and the path forward for investors and managers" John Wiley & Sons, Inc 2016

10 Lev, B, "The deteriorating usefulness of financial report information and how to reverse it" 48 (48): 465-493, 2018