This discussion provides several explanations for the evidence presented in Balachandran and Mohanram (2010) that are consistent with efficient contracting. I also show that—contrary to the suggestion of the title—CEOs do not benefit from value destroying growth in earnings. Finally, I argue that there is no conclusive evidence that corporate investments destroy value.

Additional Metadata
Keywords corporate investments, executive compensation, profitability
Persistent URL dx.doi.org/10.1007/s11142-010-9125-4, hdl.handle.net/1765/20739
Citation
Dittmann, I.. (2010). Discussion of “Are CEOs compensated for value destroying growth in earnings?”. Review of Accounting Studies, 15(3), 578–583. doi:10.1007/s11142-010-9125-4