Executive shareholding, compensation, and analyst forecast of Chinese firms

Date

2016-08-03

Advisors

Journal Title

Journal ISSN

ISSN

1466-4283

Volume Title

Publisher

Taylor and Francis

Type

Article

Peer reviewed

Yes

Abstract

We examine the impact of executive and leadership shareholding and cash compensation on analyst forecast error and dispersion as proxies for information asymmetry. We find that firms pay higher compensation (or excess compensation) to executives and directors are associated with higher information asymmetry. The positive association is stronger where executives’ and directors’ shareholdings are higher. Shareholding appears to facilitate managerial entrenchment and gives highly paid executives/leadership stronger structural power which adversely affects information disclosure leading to larger forecast error and dispersion. These results are robust to different measures of compensation and alternative models controlling for the predictability of firm level earnings. Our findings indicate that executive/director shareholding and compensation do not provide sufficient incentives for information disclosure by Chinese firms.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.

Keywords

Executive compensation, analyst forecast;, China, information asymmetry

Citation

Huang, W. and Boateng, A. (2016) Executive shareholding, compensation, and analyst forecast of Chinese firms, 49 (15), pp. 1459-1472

Rights

Research Institute

Finance and Banking Research Group (FiBRe)