CEO performance-based grants’ vesting provisions and debt contracts: Evidence from GAAP, Non-GAAP and KPI metrics

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE

Journal of Business Finance & Accounting Pub Date : 2023-05-20 DOI:10.1111/jbfa.12701

Teena Rachel Philip, Daniela Sanchez, Juan Manuel Sanchez

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引用次数: 1

Abstract

We examine the influence of CEOs’ equity and cash grants’ vesting provisions that are based on (i) accounting performance metrics prepared under US generally accepted principles (GAAP), (ii) non-GAAP performance metrics and (iii) key performance indicators (KPIs) on debt contracts. We find that grants with vesting provisions based on GAAP metrics and KPIs lead to a lower cost of debt, a lower likelihood of collateral requirements and less restrictive covenant terms. In contrast, performance-based grants with non-GAAP vesting provisions lead to a higher cost of debt, a higher likelihood of collateral requirements and more restrictive covenant terms. Supplementary analyses reveal that our results are incremental to other debtholder-friendly features in the CEO contracts, such as grants with debt-related performance measures and CEOs’ inside debt holdings, and robust to alternative variable definitions and specifications. Overall, our results suggest that debtholders understand the differing incentives associated with GAAP, non-GAAP and KPI-based performance measures, and incorporate these differences into debt contracts.

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首席执行官基于绩效的赠款的归属条款和债务合同：来自GAAP、非GAAP和KPI指标的证据

我们研究了首席执行官的股权和现金补助的归属条款的影响，这些条款基于（i）根据美国公认会计原则（GAAP）编制的会计绩效指标，（ii）非GAAP绩效指标和（iii）关键绩效指标（KPI）对债务合同的影响。我们发现，基于GAAP指标和KPI的授予条款可以降低债务成本，降低抵押品要求的可能性，减少契约条款的限制。相比之下，具有非GAAP归属条款的基于绩效的赠款会导致更高的债务成本、更高的抵押品要求可能性和更严格的契约条款。补充分析表明，我们的结果与首席执行官合同中其他有利于债权人的特征相比是渐进的，例如具有债务相关绩效指标的赠款和首席执行官的内部债务持有量，并且对替代变量定义和规范是稳健的。总体而言，我们的研究结果表明，债务持有人了解与GAAP、非GAAP和基于KPI的绩效指标相关的不同激励措施，并将这些差异纳入债务合同中。

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来源期刊

Journal of Business Finance & Accounting BUSINESS, FINANCE-

CiteScore

4.40

自引率

17.20%

发文量

期刊介绍： Journal of Business Finance and Accounting exists to publish high quality research papers in accounting, corporate finance, corporate governance and their interfaces. The interfaces are relevant in many areas such as financial reporting and communication, valuation, financial performance measurement and managerial reward and control structures. A feature of JBFA is that it recognises that informational problems are pervasive in financial markets and business organisations, and that accounting plays an important role in resolving such problems. JBFA welcomes both theoretical and empirical contributions. Nonetheless, theoretical papers should yield novel testable implications, and empirical papers should be theoretically well-motivated. The Editors view accounting and finance as being closely related to economics and, as a consequence, papers submitted will often have theoretical motivations that are grounded in economics. JBFA, however, also seeks papers that complement economics-based theorising with theoretical developments originating in other social science disciplines or traditions. While many papers in JBFA use econometric or related empirical methods, the Editors also welcome contributions that use other empirical research methods. Although the scope of JBFA is broad, it is not a suitable outlet for highly abstract mathematical papers, or empirical papers with inadequate theoretical motivation. Also, papers that study asset pricing, or the operations of financial markets, should have direct implications for one or more of preparers, regulators, users of financial statements, and corporate financial decision makers, or at least should have implications for the development of future research relevant to such users.