||The Impact of Equity Incentives on the Likelihood of Meeting or Beating Analysts’ Forecast
||Graduate Institute of Finance
Real earnings management
本研究主要探討經理人的權益誘因(Delta & Vega)是否會影響公司迎合或擊敗分析師盈餘預測之可能性。權益薪酬的用意是希望降低經理人與股東之間的代理問題，但是權益薪酬所帶來的權力誘因也導致了經理人從事盈餘操弄的行為。我們首先檢視權益誘因與公司迎合或擊敗分析師預測可能性之關係，接著利用兩階段模型進一步檢視是否權益誘因會導致經理人透過實質盈餘管理的方式來達到迎合或擊敗分析師之盈餘預測預期。結果顯示，在同時考慮Delta和Vega後，權益誘因確實會增加公司迎合或擊敗分析師之盈餘預測的可能性，尤其是Vega。此外，我們也發現權益誘因也會影響經理人利用實質盈餘管理去操弄盈餘，使得盈餘能夠達到分析師之預期。
This paper examines how equity incentives affect the likelihood of meeting or beating analysts’ earnings forecast. Equity-based compensation has been used to mitigate the agency problem between managers and stockholders, however, higher equity incentives also lead managers engaging in earnings manipulations. We first examine the relation between equity incentives (Delta and Vega) and the likelihood of meeting or beating analysts’ forecast behavior, and then using simultaneous analysis to incorporate equity incentives into real earnings management. Collectively, our results show that equity incentives are associated with the likelihood of meeting or beat analysts’ earnings forecast, especially for Vega, and equity incentives will affect this likelihood through real earnings management. This indicates that equity incentives motivate managers to take real economic actions to meeting or beating analysts’ earnings forecast.
Chapter 1 Introduction 3
1.1 Research Background and Motivation 3
1.2 Objectives and Major Findings 6
1.3 Importance of this Study 8
1.4 Organization of this Study 9
Chapter 2 Literature Review and Development of Hypotheses 10
2.1 Equity Incentives and Earnings Management 10
2.2 Real Earnings Management 12
2.3 Equity Incentives and Meet or Beat Analysts’ Forecast 13
2.4 Development of Hypotheses 15
Chapter 3 Data and Methodology 17
3.1 Data and Sample Selection 17
3.2 Variable Measurement 18
3.2.1 Measurement of Real Earnings Management 18
3.2.2 Likelihood of Meeting or Beating Analysts’ Forecasts 20
3.2.3 Measurement of Equity Incentives 20
3.3 Descriptive Statistics 21
3.4 Research Design 22
Chapter 4 Empirical Result 24
4.1 Equity Incentives and Meeting or Beating Analysts Forecast 24
4.2 Real Earnings Management and Meeting or Beating Analysts Forecast 25
4.3 Additional Test 29
Chapter 5 Conclusion 32
APPENDIX (Variable Measurement) 35
LIST OF TABLE
Table 5 Analysis of the Impact between Equity Incentives and Real Earnings Management (Cheng) 44
Table 6 Analysis Equity Incentives and Meeting or Beating Analysts’ Forecasts (Davis) 45
Table 7 Analysis of the Relation of Meeting or Beating Analysts’ Earnings Forecasts and Real Earnings Management (Davis) 46
Table 8 Analysis of the Impact between Equity Incentives and Real Earnings Management (Davis) 47
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