Does Longer Duration of Executive Compensation Foster Investment Efficiency?

In this paper, I examine whether longer duration of executive compensation influences investment decisions. exploit a regulation designed to foster long-term orientation in as an exogenous trigger lengthen executives' incentive duration. find that treated firms reduce their abnormal relative control firms, implying increase efficiency. These results are robust different measures investment, several models expected and plausible groups. The treatment effect is economically significant, the reduction amounts about 10% mean investment. It appears mandated has greatest on efficiency had low degree committee independence before shock. Further, it seems lower stems greater extent from reductions over-investment.