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Reputation penalties for poor monitoring of executive pay: Evidence from option backdating
Ertimur, Yonca; Ferri, Fabrizio; Maber, David A. - In: Journal of Financial Economics 104 (2012) 1, pp. 118-144
We study whether outside directors are held accountable for poor monitoring of executive compensation by examining the reputation penalties to directors of firms involved in the option backdating (BD) scandal of 2006–2007. We find that, at firms involved in BD, significant penalties accrued to...
Persistent link: https://www.econbiz.de/10010576094
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The relation between equity incentives and misreporting: The role of risk-taking incentives
Armstrong, Christopher S.; Larcker, David F.; … - In: Journal of Financial Economics 109 (2013) 2, pp. 327-350
Prior research argues that a manager whose wealth is more sensitive to changes in the firm׳s stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk, the sensitivity of the manager׳s wealth to...
Persistent link: https://www.econbiz.de/10011039247
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Testing for Distortions in Performance Measures: An Application to Residual Income Based Measures like Economic Value Added
Sloof, Randolph; Praag, Mirjam van - Tinbergen Instituut - 2014
.<P> Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be … used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted, leading to … and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance measure that elicits …
Persistent link: https://www.econbiz.de/10011257274
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CEO optimism and incentive compensation
Otto, Clemens A. - In: Journal of Financial Economics 114 (2014) 2, pp. 366-404
I study the effect of chief executive officer (CEO) optimism on CEO compensation. Using data on compensation in US firms, I provide evidence that CEOs whose option exercise behavior and earnings forecasts are indicative of optimistic beliefs receive smaller stock option grants, fewer bonus...
Persistent link: https://www.econbiz.de/10010939423
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Equity grants to target CEOs during deal negotiations
Heitzman, Shane - In: Journal of Financial Economics 102 (2011) 2, pp. 251-271
I investigate the determinants and consequences of granting equity to the target's Chief Executive Officer (CEO) during deal negotiations. These negotiation grants likely reflect information about the acquisition, benefit from the deal premium, and provide more timely bargaining incentives. I...
Persistent link: https://www.econbiz.de/10010571669
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CEO deal-making activities and compensation
Fich, Eliezer M.; Starks, Laura T.; Yore, Adam S. - In: Journal of Financial Economics 114 (2014) 3, pp. 471-492
monitoring and that in deal-making firms, neither CEO turnover nor pay-for-performance responds to underperformance. We introduce …
Persistent link: https://www.econbiz.de/10011076294
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The Degradation of Distorted Performance Measures
Sloof, Randolph; Praag, Mirjam van - Tinbergen Institute - 2008
Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts … noise and distortion of a performance measure can be measured. Courty and Marschke (2007) have recently developed an elegant … empirical test to detect distortion, based on the degradation of a performance measure subsequent to increasing its weight in …
Persistent link: https://www.econbiz.de/10005137095
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The Degradation of Distorted Performance Measures
Sloof, Randolph; Praag, Mirjam van - Tinbergen Instituut - 2008
Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts … noise and distortion of a performance measure can be measured. Courty and Marschke (2007) have recently developed an elegant … empirical test to detect distortion, based on the degradation of a performance measure subsequent to increasing its weight in …
Persistent link: https://www.econbiz.de/10011256322
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Accountability of independent directors: Evidence from firms subject to securities litigation
Brochet, Francois; Srinivasan, Suraj - In: Journal of Financial Economics 111 (2014) 2, pp. 430-449
We examine which independent directors are held accountable when investors sue firms for financial and disclosure-related fraud. Investors can name independent directors as defendants in lawsuits, and they can vote against their reelection to express displeasure over the directors’...
Persistent link: https://www.econbiz.de/10010737663
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Turbulence, Flexibility and Performance of the Long-lived Small Firm
Power, Bernadette; Reid, Gavin C - Tinbergen Institute - 2003
in Scotland. New measures of flexibility and turbulence are used to explain the performance of mature small firms. These … depend on our unique body of evidence from interviews with owner managers. Performance is measured using a Likert scale over … performance. This is done in two forms. The first involves generalised least squares estimation (with heteroskedastic adjustment …
Persistent link: https://www.econbiz.de/10005137189