CEO Compensation and Stock Mispricing : How Do Boards React to Mutual Fund Flow-Driven Price Pressure?

We examine how boards decide on CEO compensation depending on how informative stock prices are. In order to mitigate the endogeneity of board decisions, we use extreme mutual fund flow-driven trading pressure as an exogenous shock to stock price informativeness. Consistent with informed boards making economically efficiency decisions, we find that boards rely more on accounting and less on stock performance in setting CEO's cash compensation when stock prices are temporarily less informative. This finding is more pronounced for those firms with more experienced boards and those without precisely specified formulae for cash compensation, i.e., where boards have more discretion over performance-based compensation

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Year of publication:	2019
Authors:	Cai, Jie
Other Persons:	Cremers, Martijn (contributor) ; Wei, Kelsey D. (contributor)
Publisher:	[2019]: [S.l.] : SSRN
Subject:	Investmentfonds \| Investment Fund \| Führungskräfte \| Managers \| Börsenkurs \| Share price \| Managervergütung \| Executive compensation \| Vorstand \| Executive board \| Corporate Governance \| Corporate governance \| Institutioneller Investor \| Institutional investor \| Kapitaleinkommen \| Capital income \| Anlageverhalten \| Behavioural finance \| Aktienoption \| Stock option

Extent:	1 Online-Ressource (55 p)
Type of publication:	Book / Working Paper
Language:	English
Notes:	Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 28, 2018 erstellt
Other identifiers:	10.2139/ssrn.2178160 [DOI]
Classification:	G23 - Pension Funds; Other Private Financial Institutions ; G34 - Mergers; Acquisitions; Restructuring; Corporate Governance ; M12 - Personnel Management
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10012905487