Effects of Time Horizon Dimensions of Profits on Board of Directors Compensation

Abstract

Objective: This study examines the effects of time horizon dimensions of profits on board of directors’ compensation, and identifies the current degree of stickiness of board of directors’ compensation with the dimensions of time horizon of profit in the companies accepted in the Tehran Stock Exchange during the period 2010 to 2017. Method: Data was collected using document mining and databases referencing method, and then was analyzed by Eviews software. Panel data model was applied to the research test hypotheses. Results: The results showed that based on R&D, advertising and marketing expenditure, in the long-term horizon, more compensation will be assigned than in the short-term horizon. Also, the use of revenue-raising strategy and operating and non-operating profit-enhancing strategies has no effect on Board of director’s compensation. Conclusion: R&D, advertising and marketing expenditures for landlords are more tangible than income growth strategies. Therefore, the intermediate elements of net profit which indicate sustainability, continuity and time horizons of profit, are not effective indicators in the compensation of board of directors.

Keywords

• profits time horizon
• profit strategy
• board of director’s compensatio
• research and development expenditure