Xiaoxia Peng, Assistant Professor of Accounting, has been awarded a grant by the Research Foundation of Institute of Management Accountants (IMA), which is the worldwide association of accountants and financial professionals in business. The IMA Research Foundation (IRF), recognizing the impact of COVID-19 on all aspects of management accounting, announced the 2020 special COVID-19 call for research proposals to support management accounting-related research during these hard times.
Peng’s proposal is titled “COVID-19 Motivated Changes to Executive Compensation and Incentives.” The objective of the research is two-fold. First, Peng and her colleagues seek to gain in-depth understanding of changes to compensation contracts around the COVID crisis. Firms announced cuts to executive salary in the spring but less well known are any changes made to incentive compensation plans. Firms were also confronted with declined share prices that jeopardized the value of equity compensation and may have responded by increasing equity grants or repricing stock options. After documenting the extent to which compensation contracts change, Peng and her team will then examine how compensation practices are mimicked by peer firms. Because not all firms made changes to compensation and among those who did, the changes were not necessarily similar, pay changes around COVID provide us with a unique setting to study which firms are compensation leaders and which are followers and how pay practices permeate peer groups.