The effects of executive compensation and outside monitoring on firms' pre-repurchase disclosure behavior and post-repurchase performance
Journal
REVIEW OF QUANTITATIVE FINANCE AND ACCOUNTING
Journal Volume
54
Journal Issue
1
Pages
111-158
Date Issued
2020
Author(s)
Abstract
We show that corporate governance mechanisms play an important role in controlling managers’ opportunistic behavior. Low executive equity compensation and a high intensity of outside monitoring help to discourage undesirable self-interested disclosure decisions by management before share repurchases. Corporate governance mechanisms also have a significant impact on long-run abnormal stock prices and operating performance. Firms that manipulate pre-repurchase disclosures experience positive long-term abnormal stock returns. However, we do not find that these firms experience positive long-run operating performance. Corporate governance mechanisms significantly attenuate the tendency toward negative pre-repurchase disclosures and their effects on stock prices and operating performance.
Subjects
Corporate governance; Repurchase; Voluntary disclosure; Long-term performance; INSTITUTIONAL INVESTORS; EARNINGS MANAGEMENT; OFFICER COMPENSATION; CORPORATE GOVERNANCE; LARGE SHAREHOLDERS; ANALYST COVERAGE; AGENCY COSTS; MARKET; DIRECTORS; OWNERSHIP
Publisher
SPRINGER
Type
journal article