Executive Bonus Contract Characteristics and Share Repurchases
研究了奖金合同中基于每股收益的激励条款如何影响高管进行股票回购的决策，发现当每股收益刚好低于奖金门槛或最高水平时，高管更可能进行回购且花费更多，但回购成本也更高。
ABSTRACT We examine the importance of bonus contract characteristics, specifically, with respect to the relation between EPS-based bonuses and share repurchases. We find that managers are more (less) likely to repurchase shares and spend more (less) on repurchases when as-if EPS just misses (exceeds) the bonus threshold (maximum) EPS level. We find no such relation when as-if EPS is further below the threshold. We find weak evidence that managers of firms with as-if EPS just below the EPS target are more likely to repurchase shares and spend more on repurchases relative to firms with as-if EPS just above the EPS target. We further find that the incentive-zone slopes specified in the bonus contracts are positively associated with share repurchases. Managers making bonus-motivated repurchases do so at a higher cost. Together, our results highlight the importance of compensation design in motivating managers' behavior and aligning managers' incentives with shareholders. JEL Classifications: M41; M52.