The importance of an alignment between compensation-contracting and revenue valuation roles

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Presented by Associate Professor Anup Srivastava

Lectures, talks and seminars

School of Accounting and Commercial Law Research Seminar Series

17th May 2019 11:00am to 17th May 2019 12:30pm

Rutherford House Seminar Room 204 (RH204)

This talk discusses how revenue, the closest accounting proxy for product market success, is used as a metric in executive compensation contracts when it provid

Such an alignment between the contracting and the valuation roles of revenue is higher when a firm’s initial revenue signals the success of its business model and when dominance in product markets determines the firm’s survival and winner-takes-all profits. Firms displaying these characteristics increase over time as newer firms achieve scalability from successful intangible investments.

Furthermore, they are better off pursuing rapid growth and establishing their dominance in idea-based product markets than slowing down and appropriating profits. As a result, firms increasingly incentivize managers to enhance and protect market shares, instead of just pursuing profits. Meanwhile, the contracting and value-relevance roles of revenues improve over time.

For catering purposes, please email Lee.Vassiliadis@vuw.ac.nz by 11am on Thursday 16 May.

For more information contact: Dr Amanda Reilly

Speaker Bios

Anup Srivastava holds the prestigious Canada Research Chair at Haskayne School of Business, University of Calgary. Previously, he worked at Kellogg School of Management (Northwestern University) for six years and Tuck School of Business (Dartmouth College) for four years. Anup holds a BTech in Mechanical Engineering from the Indian Institute of Technology Delhi, MBA in Finance from the University of Delhi, and PhD in Accounting from Texas A&M University.

Anup brings vast corporate experience of almost fourteen years. He worked as a banker, consultant, and corporate executive in the East and West Coast cities of the United States and India. He has worked at billion-dollar conglomerates as well as cash-strapped startups.

His research interests lie in business strategy, hyper competition, corporate survival, earnings quality, management forecasts, CEO pay, executive stock options, intangibles, financial risks, immigration, and credit default swaps. He has not only published in elite scholarly journals, such as Management Science, Accounting Review, Journal of Accounting and Economics, Journal of Financial Economics, and Review of Accounting Studies but has also published seven articles on new-economy firms in Harvard Business Review.

He is one of the foremost researchers on the changing economics of listed companies. He examines how knowledge-based companies, such as Facebook, Alphabet, and Microsoft, supplant asset- and infrastructure-intensive companies, such as Walmart, General Motors, and Exxon-Mobil, in capital creation and employment generation. His research highlights key elements disrupted by this progression: accelerating corporate demise and emerging hyper-competition; changing role of the board of directors; shifts in executive incentive plans; new auditing and financial reporting requirements; the necessity of incessant innovation to survive; and a growing need for highly skilled human capital.