The Effect of Executive Compensation on Report Lag: An Empirical Evidence

• In Event: Research Paper Session—Management Accounting

Abstract

The timeliness of financial reporting has been considered to be an important factor that contributes to the well-functioning of the economy. This study extends the contemporary research stream examining the determinants of the timeliness of financial reporting process. Specifically, we investigate whether report lag is influenced by (1) level of executive compensation; (2) the level of stock-based compensation compared to cash-based compensation, and (3) the level of executive compensation above industry median. We find that firms have shorter report lag when their level of executive compensation is higher. Firms with more stock-based compensation also have shorter financial reporting delays. Finally, firms with executive compensation level above industry median are more likely to have shorter report lag.

Authors

• Indrarini Laksmana, Kent State University - Kent

• Trung Pham, Kent State University

• Mai Dao, University of Toledo