Recent regulation and legislation, along with the growing influence of compensation consultants and proxy advisors, have led to an increase in performance-contingent awards. A majority of these awards contain performance conditions tied explicitly to accounting measures. Both the structure of...

We examine how ex ante financial distress risk affects CEO compensation. In order to disentangle the joint effects of performance on compensation and distress risk, we focus our analyses on new CEOs. Our results indicate financial distress risk affects compensation through two channels. First,...

We provide new evidence on the relationship between option-based compensation and risktaking behavior by exploiting the change in the accounting treatment of stock options following the adoption of FAS 123R in 2005. The implementation of FAS 123R represents an exogenous change in the accounting...