Ceo Compensation And The Transformation Of Banking
We examine the compensation strategies of commercial bank holding companies (BHCs) during 1992-2000. In particular, we analyze whether CEO compensation is more closely tied to the presence of growth options and to risk than is revealed in earlier research. We also examine whether BHC entry into investment banking has influenced compensation policies. Our evidence shows a stronger link between growth options and CEO compensation in the 1990s than observed in earlier studies and that pay-for-performance sensitivities are substantially larger for BHCs that have entered the underwriting business. We also find that BHC leverage and variability in returns have positive effects on CEO incentive pay. Finally, we find some evidence supporting the hypothesis that pay-for-performance sensitivities decline generally at BHCs as return variability increases, as agency theory predicts. 2003 The Southern Finance Association and the Southwestern Finance Association.
Year of publication: |
2003
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Authors: | Harjoto, Maretno A. ; Mullineaux, Donald J. |
Published in: |
Journal of Financial Research. - Southern Finance Association - SFA, ISSN 0270-2592. - Vol. 26.2003, 3, p. 341-354
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Publisher: |
Southern Finance Association - SFA Southwestern Finance Association - SWFA |
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