Managerial Incentives for Attracting Attention

52 Pages Posted: 12 Oct 2017

See all articles by Nino Papiashvili

Nino Papiashvili

Ulm University

Josep A. Tribo

Stevens Institute of Technology

María Gutiérrez Urtiaga

Universidad Carlos III de Madrid-Departamento de Economía de la Empresa; European Corporate Governance Institute (ECGI)

Date Written: October 12, 2017

Abstract

This paper studies the mechanisms which motivate and allow managers to engage in cheap talk and attract market’s attention in a credible way. We consider stock split announcements, voluntary earnings forecasts and press releases issued by firms to the media as proxies for managerial cheap talk. Using a sample of 3,332 US firms for the 1992-2011 period, we show that: (i) managerial performance-related pay contracts incentivize executives to attract attention; (ii) analysts increase their coverage of firms following the use of the aforementioned proxies of cheap talk; (iii) chief executive officers get punished for attracting attention when market prices do not increase following cheap talk.

Keywords: Voluntary Disclosures, Attracting Attention, Cheap Talk, CEO Compensation

JEL Classification: G30, G32, G34

Suggested Citation

Papiashvili, Nino and Tribo Gine, Josep Antonio and Gutiérrez Urtiaga, María, Managerial Incentives for Attracting Attention (October 12, 2017). Available at SSRN: https://ssrn.com/abstract=3051641 or http://dx.doi.org/10.2139/ssrn.3051641

Nino Papiashvili (Contact Author)

Ulm University ( email )

Institute of Finance
Helmholtzstraße 18
Ulm, 89081
Germany

Josep Antonio Tribo Gine

Stevens Institute of Technology ( email )

Hoboken, NJ 07030
United States
9292708869 (Phone)
07030 (Fax)

María Gutiérrez Urtiaga

Universidad Carlos III de Madrid-Departamento de Economía de la Empresa ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34-91 624 58 40 (Phone)
+34-91 624 96 07 (Fax)

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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