An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Samuel Tiras
SUNY At Buffalo

Kareen E. Brown
SUNY At Buffalo

Abstract: In this study, we use aggregate stock option exercises over a five-year period to proxy for management’s investment horizon. We find that new stock grants to managers with long investment horizons translate into higher future earnings performance, than grants to managers with shorter investment horizons. For those firms employing managers with long investment horizons, we further find that earnings are more strongly associated with stock prices than firms with short-horizon managers, and that the market appears to fully capture the extent that these grants are associated with future earnings.

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