This study investigates the impact of CEO compensation structure on the purchase price allocation, a unique event where managers estimate and disclose fair values of various acquired non-financial assets and liabilities. We find that CEO compensation structure is an important determinant of managers' fair value measurement. In particular, the proportion of purchase price recorded as goodwill, which affects subsequent reported earnings and therefore managers' bonuses, is positively associated

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... h the relative importance of bonuses in the compensation package. We also find that, when acquirers include cash-flow-based parameters in the measures to evaluate CEO performance, the association between allocation to goodwill and the importance of bonuses diminishes.