As the direction and strategies of new ventures depend on the top management team (TMT)'s stability and continuous efforts, we investigate the relationship between executive turnover and research and development (R&D) investment investment. Furthermore, we assess the moderating role of the...

This study examines whether the CEO uses share repurchases to sell her equity grants at inflated stock prices, a concern regularly voiced in politics and media. We find that the timing of buyback programs and equity compensation, i.e., the granting, vesting, and selling of equity, is largely...

We analyze the effects of optimism and overconfidence when the manager's compensation package includes severance pay and the CEO has bargaining power. We find that optimism does not affect incentive pay but increases severance pay with a negative effect on profit. Overconfidence, on the...

Over the past 20 years, there has been a dramatic increase in the share of executive compensation paid through stock options. In this paper, we examine the extent to which tax policy has influenced the composition of executive compensation, and discuss the implications of rising stock-based pay...

We study the initiation effect of credit default swaps on CEOs performance-sensitive compensation and shareholder value. We find that the initiation effect of CDS contracts on CEO’s delta varies by the characteristics of firms. Firms with higher R&D and intangibles reduce CEO’s delta whereas...

We examine a general equilibrium dynamic economy in which each firm i) hires a manager who can divert cash flows and ii) can fire him after poor performance, generating costs to both parties.The contract is terminated when the manager's continuation value reaches his compensation at another firm...

Eighty-nine percent of S&P500 companies report benchmarking CEO pay components. Analyzing a panel of CEO compensation data entailing 1,251 S&P 1500 firms during 2007-2013, we find that: 1) total compensation benchmarking less effectively explains CEO compensation than does component-of-pay...

This paper studies the impact of corporate governance mechanisms on managerial compensation horizon under common ownership. We find that the predominant governance approach under common ownership is the threat of exit, which inadvertently exacerbates managerial myopia. Hence, common owners tend...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

This study investigates the non-linear relationship between CEO demission threats and corporate risk-taking levels. We first estimate the degree of CEO demission threats, and then examine how CEO demission threats affect the level of corporate risk-taking. Using the data of China's A-share...

We examine the impact of optimistic directors that are members of boards and compensation committees on CEOs compensation. We find that optimistic boards and compensation committees reward CEOs with a higher proportion of equity-based compensation. We utilize two natural experiments,...

This paper estimates the risk premium in CEO incentive compensation. Using detailed U.S. CEO contract compensation data and simulation analysis, we find that CEOs with riskier pay packages are paid more. The estimated risk premium from total incentive pay represents 15% of total pay. We further...

We examine how the level and structure of CEO pay is influenced by the characteristics and past experience of the members of the compensation committee, and also how these characteristics and experiences affect the probability of committee appointment. Our main findings indicate that (1) CEO pay...

Credit unions compete directly with commercial banks in markets for consumer financial services yet receive an exemption from federal corporate income tax. Commercial banks claim that credit unions are no different than banks and that the credit union tax exemption represents an unfair...

Executive equity compensation is granted out of an equity incentive plan that must be approved by shareholders. Equity incentive plans are an important precursor to equity grants because plan terms give boards of directors discretion over the amount and features of equity that can be granted...

In the empirical estimation of the relation between CEO pay and both firm and peer performance, researchers typically include conventional accounting-based measures that reflect firm performance net of executive pay expense. We analytically show that when firms evaluate CEO performance relative...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

We examine the impact of compensation committee members’ (CC members’) age on CEO compensation using FTSE 350 firms for the period 2002 to 2017. Sociological theory suggests that age is a significant demographic factor influencing individuals’ behaviour. We argue that monitoring intensity...

Racial gap in corporate leadership has prompted continuous and intense discussions, motivating research into the conditions minorities face after they reach top management positions. We contribute to the ongoing debate in this area by examining the association between CEO race and compensation....

Because prior studies find mixed results on the relation between CEOs’ pay performance incentives and a firm’s likelihood of financial reporting fraud, we restudy their relationship using innovative research methods. First, we concentrate on incentives from granting options rather than...

Using a parsimonious setup, we shed light on two channels through which a small amount of social pressure exerted by a CEO on board directors may increase the company value even in the absence of the classic tradeoff between the board's monitoring and advising tasks. First, the pressure reduces...

This paper examines whether the motivation of institutional investors in monitoring a firm can influence CEO compensation. We find that greater motivated monitoring institutional ownership is associated with a higher pay-performance sensitivity of CEO compensation, which cannot be explained by...

Executive pay clawback provisions require executives to repay previously received compensation under certain circumstances, such as a downward adjustment to the financial results upon which their incentive pay was predicated. The use of these provisions is on the rise, and the SEC is expected to...

We estimate the effect of acquisition performance and acquisition activity on CEO compensation for the full set of CEOs of large public U.S. corporations in the Execucomp database over the period 1992-2016. Most previous work has focused on publicly traded acquisition targets. We focus on the...

We examine the effect of financial markets on the tone manipulation of earnings press releases by CEOs. We find that CEOs with high compensation convexity are significantly more likely to employ positive tone management right after recent high industry returns. Further analysis shows that this...

Developments in executive compensation have resulted in more legislation and regulations on executive pay being introduced over the past two decades than in the previous hundred and fifty years. Ever since the last financial crisis, executive compensation has remained high on the agenda of many...

The goal of this systematic literature review is to provide a detailed understanding of the determinants and consequences of clawback provisions in management compensation contracts, motivated by the increasing global regulatory, practical and academic importance of implementing this new...

This paper investigates the role of executive compensation in the transmission of monetary shocks to corporate investments. We find that a managerial compensation structure that facilitates risk-taking (high Vega) is a positive and significant contributor to the translation of monetary shocks...

In this paper, I examine whether longer duration of executive compensation influences investment decisions. I exploit a regulation designed to foster long-term orientation in executive compensation as an exogenous trigger to lengthen executives' incentive duration. I find that treated firms...

How does the mandated disclosure of executive compensation affect the dynamics of compensation within a peer group of firms? We argue in this paper that, under plausible conditions, it will trigger a ratchet effect in the mean level of executive pay within the peer group and is accompanied, hand...

This article looks at the individual elements of compensation packages as well as design features of short-term and long-term incentive plans (STIPs and LTIPs) among CEOs and senior executives of Russell 3000 companies. Data is from companies that filed proxy statements between July 1, 2019, and...

This paper develops an account of the role and significance of managerial power and rent extraction in executive compensation. Under the optimal contracting approach to executive compensation, which has dominated academic re-search on the subject, pay arrangements are set by a board of directors...

This study investigates real earnings management in family firms and further examines the moderating effects of the independence and compensation of directors. Based on a sample of 106 non-financial public listed firms over 5 years in Saudi Arabia, the empirical results show that family firms...

We study the market for CEOs of large publicly-traded US firms, analyze new CEOs' prior connections to the hiring firm, and explore how hiring choices are determined. Firms are hiring from a surprisingly small pool of candidates. More than 80% of new CEOs are insiders, defined as current or...

This study explores the relationships between CEO performance targets, the pay incentives associated with those targets, and firm investment for companies listed on the FTSE All-Share index (as of April 2020) from 2013 to 2019. The study has 3 aims: explore the prevalence of different...

This study aims to explore the factors that influence the firm’s reported earnings quality (FREQ) for a sample of Egyptian firms from 2008 to 2019 by using panel data. The findings show that CEO power dynamics (CEO duality, CEO ownership, CEO tenure and CEO political connections) as negative...

We estimate the effect of acquisition performance and acquisition activity on CEO compensation for the full set of CEOs of large public U.S. corporations in the Execucomp database over the period 1992-2016. Most previous work has focused on publicly traded acquisition targets. We focus on the...

This study examines the effect of the CEO-employee pay gap on productivity and performance. Using extensive data of 751 constituents of the Standard and Poor's (S&P) 1500 index between the years 1992-2016, we found a cubic relationship between salary differential and corporate productivity, with...