We investigate the impact of changes in states' anti-takeover legislation on executive compensation. We find both pay … which reduced takeover fears allow CEO's to skim more. We compute lower bounds on the relative risk aversion coefficients … increased pay for performance offsets some of the incentive reduction caused by lower takeover threats …

paper, we use states' passage of anti-takeover legislation as a source of such independent variation. Passed in the 1980's …