Asymmetric treatment of reported pension expense and income amounts in CEO cash compensation calculations

Joseph Comprix, Karl A. Muller, III

Research output: Contribution to journalArticle

41 Citations (Scopus)

Abstract

We provide evidence that CEO cash compensation is relatively less sensitive to pension expense than pension income, suggesting that compensation committees shield CEO cash compensation from pension expense amounts. We also provide evidence that managers use relatively higher expected rate of return estimates when reporting pension income, suggesting that managers select income-increasing accounting estimates in response to compensation committees' greater emphasis on pension income in CEO cash compensation determinations. Pension cost amounts represent a unique setting to examine such behavior as their effect on CEO cash compensation can be detrimental or beneficial, but arise from the same underlying economic activity.

Original languageEnglish (US)
Pages (from-to)385-416
Number of pages32
JournalJournal of Accounting and Economics
Volume42
Issue number3
DOIs
StatePublished - Dec 1 2006

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Income
Pensions
Expenses
Chief executive officer
Cash
Compensation committees
Managers
Economic activity
Costs
Rate of return

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

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Asymmetric treatment of reported pension expense and income amounts in CEO cash compensation calculations. / Comprix, Joseph; Muller, III, Karl A.

In: Journal of Accounting and Economics, Vol. 42, No. 3, 01.12.2006, p. 385-416.

Research output: Contribution to journalArticle

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