Journal article

Heaping of Executive Compensation

Bjorn N Jorgensen, Paige H Patrick, Naomi S Soderstrom

Journal of Management Accounting Research | American Accounting Association | Published : 2020


We investigate whether compensation grants are subject to "heaping", the tendency of less informed individuals to provide round values when reporting estimates of discrete data. We document that an unexpectedly large number of CEOs receive round compensation (i.e., evenly divisible by 100,000 and/or 10,000). We investigate whether consistent with heaping, frequency of round compensation varies with proxies for boards of directors' effort in setting compensation. We find that round compensation is more common when boards have characteristics suggesting they provide weak oversight of compensation and thus face more uncertainty in estimating compensation. We also find less frequent round compen..

View full abstract

University of Melbourne Researchers