2026-09-19T12:36:10Zhttps://dspace.mit.edu/server/oai/requestoai:dspace.mit.edu:1721.1/1179972026-06-17T14:46:20Zcom_1721.1_7582com_1721.1_7581col_1721.1_131022
John E. Core.
Packard, Heidi A
Sloan School of Management.
Sloan School of Management
2018-09-17T15:53:09Z
2018-09-17T15:53:09Z
2018
2018
http://hdl.handle.net/1721.1/117997
1051300088
Thesis: Ph. D., Massachusetts Institute of Technology, Sloan School of Management, 2018.
Cataloged from PDF version of thesis.
Includes bibliographical references (pages 37-39).
This paper examines whether earnings targets used in long-term performance-based compensation plans predict future performance. Using a sample of targets from long-term grants made to CEOs from 2007 to 2012, I find that earnings targets provide information about future earnings outcomes; however, analysts do not respond to the information targets provide at the time of disclosure. Rather, I find analysts primarily adjust their expectations in the year of the performance period. The information value of targets is robust to variation in crosssectional factors such as monitoring and financial reporting concerns, and concentrated in cases where agency conflicts are low and traditional management forecasts are not available. To my knowledge, this analysis is the first to document a forecasting role for the long-term targets used in earnings-based compensation plans.
by Heidi A. Packard.
Ph.D.
50 pages
eng
Massachusetts Institute of Technology
MIT theses are protected by copyright. They may be viewed, downloaded, or printed from this source but further reproduction or distribution in any format is prohibited without written permission.
http://dspace.mit.edu/handle/1721.1/7582
Sloan School of Management.
Are long-term earnings targets forecasts?
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<Abstract>This paper examines whether earnings targets used in long-term performance-based compensation plans predict future performance. Using a sample of targets from long-term grants made to CEOs from 2007 to 2012, I find that earnings targets provide information about future earnings outcomes; however, analysts do not respond to the information targets provide at the time of disclosure. Rather, I find analysts primarily adjust their expectations in the year of the performance period. The information value of targets is robust to variation in crosssectional factors such as monitoring and financial reporting concerns, and concentrated in cases where agency conflicts are low and traditional management forecasts are not available. To my knowledge, this analysis is the first to document a forecasting role for the long-term targets used in earnings-based compensation plans.</Abstract>
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