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Performance-Based Vesting Compensation and Debt Contracting

King, Tao-Hsien Dolly - 2019

This paper examines whether the risk-taking incentives induced by performance-based vesting (p-v) compensation influence bank loan contracting and credit ratings. Consistent with our risk-shifting hypothesis, we find that the p-v based compensation, as measured by the proportion of grant date...

Persistent link: https://www.econbiz.de/10012865414

Performance Contingencies in CEO Equity Awards and Debt Contracting

Bizjak, John M. - 2018

We find that firms that grant performance-contingent (p-c) equity awards with accounting-based vesting conditions to their CEOs have lower cost of debt and less restrictive loan terms. The benefits of p-c accounting awards on debt financing are greater when the moral hazard problem faced by...

Persistent link: https://www.econbiz.de/10012934578

CEO Incentive Contracts, Risk Shifting, and Commitment Benefits of Gender Diverse Boards

Nanda, Vikram K. - 2020

We argue gender-diverse boards are associated with distinct preferences that reassure investors about their commitment to moderate risk and boost long-term corporate survival. Results suggest a strong relation between gender-diverse boards and bondholder-aligned CEO compensation components,...

Persistent link: https://www.econbiz.de/10012849311

Do CEOs make their own luck? : relative versus absolute performance evaluation and firm risk

Wruck, Karen H.; Wu, Yi Lin - 2017 - Current Draft: 10/5/17

Influenced by their compensation plans, CEOs make their own luck through decisions that affect future firm risk. After adopting a relative performance evaluation (RPE) plan, total and idiosyncratic risk are higher, and the correlation between firm and industry performance is lower. The opposite...

Persistent link: https://www.econbiz.de/10011968863

The Diminishing Returns of Incentive Pay in Executive Compensation Contracts

Lund, Andrew - 2014

For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large proportions of incentive pay. This incentive pay orthodoxy has become so firmly entrenched that the current debates about executive compensation simply take it as a given. We...

Persistent link: https://www.econbiz.de/10013068058

Value-Risk Tradeoffs and Managerial Incentives

Tsui, David - 2018

managers' incentive compensation packages. I find that shareholder value increases with risk and therefore managerial risk … aversion creates potential agency conflicts between managers and shareholders. I also find that firms provide managers with … idiosyncratic (rather than systematic) risk and managers are more risk-averse. Collectively, these results suggest that firms …

Persistent link: https://www.econbiz.de/10012936802

Managerial Incentives Explanation of Equity Carve-Outs Initial Returns

Seistrajkova, Biljana - 2017

This paper studies the first day return of 227 carve-outs during 1996-2013. I find that the first day return of newly issued subsidiary stocks is explained by the reporting distortions in the pre IPO period, conditioned on whether the executives and directors of the subsidiary received stock...

Persistent link: https://www.econbiz.de/10012970504

The Presence, Value, and Incentive Properties of Relative Performance Evaluation in Executive Compensation Contracts

Bettis, J. Carr - 2014

Using data that includes specific contractual details of Relative Performance Evaluation (RPE) contracts granted to executives for 1,833 firms for the period 1998 to 2012, we develop new methods to characterize RPE awards and measure their value and incentive properties. The frequency in the use...

Persistent link: https://www.econbiz.de/10013059189

Managerial Incentives, Risk Aversion and Corporate Policy Decisions

McKnight, Scott - 2016

corporate policy, the firm's optimal policy also influences the compensation contract …

Persistent link: https://www.econbiz.de/10012994292

Credit Default Swaps, Agency Problems, and Management Incentives

Lee, Jongsub - 2018

: reducing the opportunity for managers to transfer value to equityholders from creditors via strategic default, and reducing the …

Persistent link: https://www.econbiz.de/10012932017

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