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

Author

Listed:
  • Indrarini Laksmana

    (Kent State University, USA)

  • Trung Pham

    (Kent State University, USA)

  • Mai Dao

    (University of Toledo, USA)

Abstract

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

Suggested Citation

  • Indrarini Laksmana & Trung Pham & Mai Dao, 2020. "The Effect of Executive Compensation on Report Lags: An Empirical Evidence," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-35, June.
    • Handle: RePEc:wsi:rpbfmp:v:23:y:2020:i:02:n:s0219091520500113
    DOI: 10.1142/S0219091520500113
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