This paper integrates and further develops the analysis of two discussion papers we circulated earlier, “Lucky CEOs” and “Lucky Directors.” Our study contributes to understanding the corporate governance determinants and implications of backdating practices during the decade of...

In December 2006, the Securities and Exchange Commission issued new rules that require the disclosure of the use of relative performance evaluation (RPE) in CEO compensation contracts. We find that about a third of the sample firms use RPE in the CEO compensation contract. On average, RPE users...

Are courts effective monitors of corporate decisions? In a controversial landmark case, the Delaware Supreme Court held directors personally liable for breaching their fiduciary duties, signaling a sharp increase in Delaware's scrutiny over corporate decisions. In our event study, low-growth...

Using campaign contributions to measure CEO's political connections, we find that a one standard deviation increase in political connections is associated with a 9% increase in CEOs' annual compensation and a 17% decrease in his pay-performance sensitivity. Political rents increase with the...

We study the relation between corporate governance and opportunistic timing of CEO option grants via backdating or otherwise. Our methodology focuses on how grant date prices rank within the price distribution of the grant month. During 1996-2005, about 12% of firms provided one or more lucky...