The impact of long-range managerial compensation plans on shareholder wealth

This study examines the stock price reaction around the announcement of proposed changes in long-term managerial compensation packages. The evidence indicates that on average these plans are met with positive market reactions, i.e., shareholder wealth increases. Further, we are unable to differentia...

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Bibliographic Details
Published in:Journal of accounting & economics 1985-01, Vol.7 (1), p.115-129
Main Authors: Brickley, James A., Bhagat, Sanjai, Lease, Ronald C.
Format: Article
Language:English
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Summary:This study examines the stock price reaction around the announcement of proposed changes in long-term managerial compensation packages. The evidence indicates that on average these plans are met with positive market reactions, i.e., shareholder wealth increases. Further, we are unable to differentiate the market reaction to various types of long-range compensation schemes. This result is consistent with the notion that firms with different characteristics will resolve their managerial compensation requirements differently. Thus no particular compensation package necessarily dominates all others.
ISSN:0165-4101
1879-1980
DOI:10.1016/0165-4101(85)90031-X