The Association Between Long-Term Performance Plan Use and Corporate Performance

• In Event: SESSION 3B: Performance and Planning

Abstract

Previous research has shown a positive link between long-term performance plans and corporate decision making. However minimal research exists as to whether these plans are associated with improved corporate performance. We posit that the existence of a long-term performance plan is associated with superior fundamental and stock market performance. Our large-sample empirical analysis of U.S. firms largely supports our theoretical propositions. The results provide evidence that firms with long-term performance plans have lower sales growth and leverage than other firms, but outperform other firms in terms of both fundamental performance and future abnormal stock returns.

Authors

• Derek K Oler, Texas Tech University

• James Franics Waegelein, Emporia State University