Prodded by economists in the 1970s, corporate directors began adding stock options and bonuses to the already-generous salaries of CEOs with hopes of boosting their companies' fortunes. Guided by largely unproven assumptions, this trend continues today. So what are companies getting in return...

Using a news-based index of aggregate policy uncertainty in the US economy, we document a strong negative relation between policy uncertainty and corporate risk-taking. We show that high levels of policy uncertainty are associated with significantly lower future stock return volatility at the...

Making use of unique balanced panel data for the German chemical sector from the years 2008 to 2011, we explore the extent to which managers' compensation was affected by the economic crisis and the extent to which it increased afterwards. Carrying out longitudinal analyses, we find that, on...

We document three new facts about gender differences in executive compensation. First, female executives receive a lower share of incentive pay in total compensation relative to males. This difference accounts for 93 percent of the gender gap in total pay. Second, the compensation of female...

The literature on shareholder voting has mostly focused on the influence of proxy advisors on shareholder votes. We exploit a unique empirical setting enabling us to provide a direct estimate of management's influence. Analyzing shareholder votes on the frequency of future say on pay votes, we...

We examine the effect of say on pay regulation in the United Kingdom (UK). Consistent with the view that shareholders regard say on pay as a value-creating mechanism, the regulation's announcement triggered a positive stock price reaction at firms with weak penalties for poor performance. UK...

Using a large sample of U.S. acquiring and non-acquiring firms and covering a broad sample of transactions, we examine the effects of mergers and acquisitions (M&A) on CEO compensation during 1993-2006, a period of intense M&A activity. We alleviate endogeneity concerns through dynamic panel...

Do horizontal wage comparisons affect firm policies on executive pay? This paper explores that question using a 1992 SEC proxy disclosure rule that mandated increased disclosure of executive pay. We argue that this rule differentially increased wage comparisons within firms with...

We investigate the economic role of proxy advisors (PA) in the context of mandatory “say on pay” votes, a novel and complex item requiring significant firm-specific analysis. PA are more likely to issue an Against recommendation at firms with poor performance and higher levels of CEO pay and...

Clawbacks are contractual provisions in executive compensation contracts that allow for an ex post recoupment of variable pay if certain triggering conditions are met. As a result of regulatory responses to financial crises and corporate scandals as well as of growing shareholder pressure to...