The Studing the Aggressive Initial Forecasts Effect on the Relationship between Management Forecast Error and Executive Cash Compensation

Investigating the role of aggressive initial forecast on the relationship between management forecast error (MFE) and executive cash compensation is the main target of this study. The study period covered the years between 1389 and 1393 and the statistical sample of the study included 125 companies listed in Tehran Stock Exchange (TSE). We used Panel-Data Regression and EGLS method to estimate the model parameters. The results of testing the hypotheses of the study for each of the five years and the pooled sample indicate existence of a positive and meaningful relationship between the two factors of management earning forecast error and executive cash compensation. Also, the positive relationship was observed between the management earning forecast error and executive cash compensation is strengthened while the current realized earning exceeds aggressive initial forecast.