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Author: Min Jung Kang
Publisher:
ISBN: 9781267847461
Category : Bankers
Languages : en
Pages : 202
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Book Description
Author: Min Jung Kang
Publisher:
ISBN: 9781267847461
Category : Bankers
Languages : en
Pages : 202
Get Book Here
Book Description
Author: Hongxia Wang
Publisher:
ISBN:
Category :
Languages : en
Pages : 155
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Book Description
This dissertation is a series of study on CEO turnover, succession, and compensation. I investigate how the Sarbanes-Oxley Act (SOX) affects CEO tenure and the characteristics of CEO turnover. I hypothesize that boards tend to appoint younger (older) CEOs in firms with high (low) managerial discretion. I examine the role of managerial discretion in setting CEO pay at succession. This study enriches existing research on managerial discretion and succession by linking CEO bargaining power at succession with the theory of managerial discretion.
Author: Sooyoung Song
Publisher:
ISBN:
Category :
Languages : en
Pages : 302
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Author: Andrew Fodor
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
The multi -period model presented in this paper has the advantage of considering aggregate performance over the tenure of the CEO. The key to this alternative compensation design is the holding back of some portion of CEO pay. That is to not pay the CEO the complete sum of pay justified by performance. This will allow the board to later penalize the CEO by not distributing previously held back pay. I present, and find support for, a number of hypotheses supporting the use of the holdback compensation policy.
Author: Timothy C. Carpenter
Publisher:
ISBN: 9781339034072
Category : Chief executive officers
Languages : en
Pages : 77
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Book Description
This dissertation examines the effects resultant from compensation committees' decisions on the structure and magnitude of executive compensation packages. Executive compensation has long been a contentious topic, both in the U.S. and abroad. Specifically, equity-based pay (eg. options and stock grants) has been increasing in popularity and met with mixed reactions. This form of remuneration aims to properly align the goals of executives with those of their shareholders; however, the use of equity based-pay tends to result in larger pay packages. Thus, the potential reasons for its recent popularity range from a forthright belief in its optimality to more Machiavellian motives. Moreover, incentive compensation has a number of secondary effects which must be accounted for, including effects on executive retention and accounting quality among many others. This line of research aims to improve our understanding of executive pay so compensation committees can better serve their shareholders by crafting more appropriate pay packages and better understanding the potential benefits and consequences therefrom. In Chapter One, I analyze the effect of cumulative wealth and unvested equity compensation on voluntary CEO turnover. I find that wealthier CEOs are less likely to retire or resign. This suggests that the CEO vetting process is able to sort out those individuals who would substitute high wealth for additional leisure. Consistent with Balsam and Miharjo (2007), CEOs with more unvested equity are significantly less likely to leave their position. However, I find that unvested equity is less effective as a retention device if the CEO has high existing wealth. In contrast to prior results, my results show no significant relation between existing CEO wealth and incentive compensation. In Chapter Two, I analyze the structure of compensation packages awarded in the United Kingdom compared to their U.S. counterparts. I consider the asymmetric relationship between CEO pay and firm performance in the U.S. and test for similar relations in the U.K. My findings confirm that asymmetry exists in the U.S. in that pay is more strongly associated with upside risk than downside risk. In contrast, U.K. CEO pay is more symmetrically associated with risk. Therefore, while U.S. CEOs face greater risk as a result of compensation with more equity-based pay, their pay to performance is asymmetrical. This suggests an additional component that risk-based arguments must consider before concluding that higher pay in the U.S. is structural and, thus, rational. Finally, in Chapter Three, I examine the effect of executive wealth on accounting quality. Results indicate that firms with wealthier CEOs are significantly more likely to restate earnings. To some extent this effect may be mitigated by compensation committees through the use of unvested compensation components, but this reduction is minimal. Firms with wealthier CEOs also exhibit greater levels of earnings management. Consistent with SEC auditors being aware of this, firms with wealthier CEOs are more likely to face an enforcement action, suggesting that these firms are both targeted and, ultimately, found in violation of accounting requirements. Chief Financial Officers' wealth shows a similar (and even stronger) relationship, increasing the likelihood of an earnings restatement as well as the magnitude of earnings management, but SEC enforcement actions do not reflect this relationship. My results suggest that SEC auditors may be able to improve governance by targeting firms that employ wealthy CFOs, and particularly those with recent large gains.
Author: Tobias Oberpaul
Publisher: BoD – Books on Demand
ISBN: 3947095112
Category : Business & Economics
Languages : en
Pages : 202
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Book Description
Compensation contracts have become ever more complex and individualized, particularly in the executive compensation domain, where increasingly diverse stakeholder demands and governance requirements have led to the inclusion of more and increasingly interrelated components into compensation contracts. Even the compensation of lower-level employees has become complex as firms individualize employee compensation and use many different rewards simultaneously. Research has examined elements of compensation in isolation but has attempted to avoid the complexities of compensation. This dissertation examines the consequences of compensation complexity and compensation design dispersion and contributes to a better understanding of compensation and its consequences for firms and employees. The first study examines how the complexity of executive compensation contracts affects firm performance. It finds that CEO compensation complexity negatively affects accounting, market, and ESG (i.e., environmental, social, and governance) metrics of firm performance and explores mechanisms that help explain the relationships. The second study examines the effect of compensation design dispersion within top management teams and its impact on executive turnover. The results show that compensation design dispersion affects executive turnover, both directly and in interaction with relative pay level. The third study addresses the role of compensation design dispersion in the development of procedural justice perceptions. Using two experiments, this study shows that compensation design dispersion causes lower procedural justice perceptions, which appears to be less problematic for participants with relatively easier to understand contracts. In summary, this dissertation provides a nuanced overview of complex compensation design and compensation design dispersion. The findings contribute to a better understanding of the effectiveness of compensation as an incentive and sorting tool for organizations, and of the implications of compensation design for the functioning of teams.
Author: Scott William O'Brien
Publisher:
ISBN:
Category :
Languages : en
Pages : 84
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Book Description
The two essays of my dissertation examine issues concerning CEO compensation. First, I examine the use of relative performance evaluation (RPE), asymmetry in pay for skill/luck, and compensation benchmarking for a sample of firms involved in a spinoff. The spinoff affects firm characteristics that influence the use of these compensation practices. I find that RPE is used for post-spinoff CEOs, but not pre-spinoff CEOs. This result is consistent with RPE being more prevalent as performance benchmark firms are easier to identify. Post-spinoff CEOs are also paid asymmetrically for luck where they are rewarded for good luck but not punished for bad luck. Both pre- and post- spinoff CEOs receive similar levels of compensation benchmarking. Second, I study the role of reference points in CEO compensation. Using two samples, I identify multiple reference points and link the reference points to the behavioral phenomena of prospect theory and anchoring-and-adjusting. In a sample of CEOs who move from one company to another (mover sample), I estimate the CEOs' expected gain or loss in compensation as a result of the move, but do not find the effects of the expected gain or loss to be consistent with prospect theory preferences. Also in the mover sample, I find evidence of anchoring-and-adjusting where the compensation of the incoming CEO's predecessor (anchor) affects the compensation of the incoming CEO. Lastly, I find evidence that fiscal year high and low prices act as reference points where drops from the fiscal year high price to the fiscal year end price result in larger decreases in compensation than increases in compensation from the fiscal year low price to the fiscal year end price, consistent with prospect theory.
Author: Randy Beavers
Publisher:
ISBN:
Category : Electronic dissertations
Languages : en
Pages : 167
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Book Description
In essay one, we examine overconfident CEO-directors and find they attend more board meetings, are more active in nominating committees, and have more independent directorships. Attendance is higher when multiple overconfident directors are present on the board. When an overconfident board selects a new CEO after a CEO turnover, they are more likely to appoint a better prepared and more reputable CEO. Overconfident boards are also more likely to select an overconfident CEO. We also find overconfident boards exacerbate the restrained use of debt when an overconfident CEO is present, and we find evidence that the association between CEO-directors and greater CEO pay is driven solely by overconfident CEO-directors on the board. This evidence indicates overconfident CEO-directors exhibit significant influence on the board and over the firm's CEO. In essay two, I analyze the CEO incentives of inside debt in the form of deferred equity compensation in the context of M & A decisions. CEO inside debt holdings are negatively associated with the likelihood of the firm engaging in an M & A. When firms with higher levels of CEO inside debt decide to engage in an acquisition, those acquisitions are non-diversifying, relatively smaller deals, and are paid using a greater portion of stock. The evidence indicates that inside debt incentivizes CEOs to make less risky decisions for the benefit of debt holders and at the expense of shareholders. In essay three, I analyze both CEO inside debt and firm debt jointly to further investigate compensation incentives of risky decision-making and the resulting financial policy decisions concerning the debt structure of the firm. I find larger firms with high CEO inside debt tend to diversify, as calculated by the Herfindahl-Hirschman index of debt type usage. These types of firms use a higher percentage of term loans and other debt but a lower percentage of drawn credit lines and commercial loans. Larger firms with high CEO inside debt have lower interest rates on these debt instruments and shorter maturities, suggesting a more conservative financing policy with regards to debt.
Author: Jing Luo
Publisher: Open Dissertation Press
ISBN: 9781361383629
Category :
Languages : en
Pages :
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Book Description
This dissertation, "The Real Effects of CEO Compensation: Evidence From Equity and Bonus Incentive Plans" by Jing, Luo, 羅婧, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: This thesis consists of two essays exploring the effects of executive compensation contracts on the real economy. Evidence from equity incentive schemes and annual bonus plans are provided separately in the two essays. The first essay examines the relation between CEO option compensation and bank risk-taking, and the role of CEO option compensation in affecting bank performance during the 2007-2008 financial crisis. Through panel regressions, I find that over the sample period (1993-2011), option awards received by bank CEO and CEO option holdings lead to higher bank risk which is not rewarded by better performance. Bank CEOs take more risk by engaging more in financial innovation and maintaining more risky loan portfolios. Institutional investors favor high option compensation in their own interests of pursuing short-term stock price upswing, while a larger board corrects this excessive risk-taking by providing bank CEOs with less option compensation. Cross-sectional evidence shows that during the crisis period, the effect of option compensation in increasing risk-taking and worsening performance comes from exercisable option holdings. In addition to the findings regarding option compensation, stock awards are shown to affect bank risk and performance, while stock holdings play no role. In the second essay, using a hand collected sample of 1491 firm-years spanning 2006-2011, for which I have been able to gather from annual incentive schemes performance measures and two levels of corresponding targets which represent board directors' performance expectations on chief executive officers (CEOs), I discover that the probability of CEO turnover significantly increases when a firm fails to meet its performance targets, and the likelihood of CEO replacement becomes even higher when minimum performance targets are missed. In a horse race of various financial measures used, failure to meet earnings targets most significantly increases the likelihood of CEO dismissal, and cash flow matters most when minimum targets are considered. Further, the effect varies with firm characteristics in that failing to meet revenue targets lead to turnover only in growth firms, while only in distressed firms CEOs are more likely to lose the job because of missing cash flow targets. Results are robust to the control of possible selection issues related to performance target disclosure and the choice of financial measures. Subjects: Executives - Salaries, etc
Author: Eliezer M. Fich
Publisher:
ISBN:
Category :
Languages : en
Pages :
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The recent wave of revelations involving corporate governance problems has created significant interest in the relationships between chief executive officers (CEOs) and their boards of directors. In this paper we focus on one important but previously uninvestigated characteristic of boards: the tendency of many boards to have two (or more) directors who are also members of another company's board. We define this relationship as a mutual interlock. We explore the consequences of this phenomenon for CEO compensation and CEO turnover.Our empirical analyses - conducted for a sample of 366 large companies, in which 87% of the companies have at least one mutual interlock - show that CEO compensation tends to be higher and CEO turnover tends to be lower when the CEO's board has one or more pairs of board members who are mutually interlocked with another company's board. There are two possible interpretations of these results. One is that the mutual interlocks are an indication of and a contributor to CEO entrenchment, and the higher compensation and lower turnover follow from this entrenchment. The other is that the mutual interlocks are an indication of the strengthening of an important and valuable strategic alliance for the company, and the higher CEO compensation and lower turnover are the CEO's reward for arranging the alliance. We believe that the first interpretation is more accurate, for the reasons discussed in the paper.
