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Characteristics Associated with the Corporate Decision to Adopt Long‐term Performance Plans

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  • Vernon J. Richardson
  • James F. Waegelein

Abstract

This study investigates why firms adopt long‐term performance plans. The results provide evidence that firms that adopt long‐term performance plans have higher risk as measured by Beta, have lower percentages of managerial stockholdings, have higher levels of investment in research and development expenditures two years prior to adoption of a long‐term performance plan, and experience increases in the ratio of debt to total assets in the two year period prior to long‐term performance plan adoption. Also, firms increase their investments in research and development and capital expenditures following adoption of long‐term performance plans.

Suggested Citation

  • Vernon J. Richardson & James F. Waegelein, 2003. "Characteristics Associated with the Corporate Decision to Adopt Long‐term Performance Plans," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 30(3‐4), pages 621-644, April.
    • Handle: RePEc:bla:jbfnac:v:30:y:2003:i:3-4:p:621-644
    DOI: 10.1111/1468-5957.00010
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    References listed on IDEAS

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    Cited by:

    1. Pierre Chaigneau, 2010. "The Optimal Timing of Executive Compensation," FMG Discussion Papers dp660, Financial Markets Group.

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