We examine the association between societal trust and the levels of CEO compensation and the proportion of equity-based compensation of 897 firm-years from 18 countries over the 2007- 2013 period. We find both the levels of CEO compensation as well as the proportion of equity based compensation...

We show in a theoretical model that credit default swaps induce managerial agency problems through two channels: reducing the opportunity for managers to transfer value to equityholders from creditors via strategic default, and reducing the intensity of monitoring by creditors, which leads to...

I document the richness of CEO compensation packages and show that boards learn about the desirability of the many complex package features through observing how these features are associated with firm performance. I first capture the detailed features of plan-based awards for CEOs of the...

Using a regulation that increased portfolio disclosure frequency of US mutual funds as an exogenous shock shortening funds’ investment horizon, we find that affected funds influence portfolio firms to reduce the pay duration of their executives to incentivize them to also have shorter...

This paper estimates the risk premium in CEO incentive compensation. Using detailed U.S. CEO contract compensation data and simulation analysis, we find that CEOs with riskier pay packages are paid more. The estimated risk premium from total incentive pay represents 15% of total pay. We further...

The newly enacted federal Say on Pay rule will require public firms to periodically provide shareholders with an opportunity to cast an advisory vote regarding its most recent year's executive compensation. Like other efforts to increase shareholder power, Say on Pay has attracted criticism from...

We examine the selection of peer groups that boards of directors use when setting CEO compensation. The challenge is to ascertain whether peer groups are selected to (i) attract and retain executive talent and/or (ii) enable rent extraction by inappropriately increasing compensation. We find...

We examine how accounting-based compensation plans influence a firm's contracts with its creditors. After granting long-term accounting-based compensation plans (LTAPs) to CEOs, firms pay lower spreads and have fewer restrictive covenants in new bank loans. Mechanisms leading to lower borrowing...

This paper focuses on the effect of relative performance evaluation (RPE) on top managers’ compensation in Chinese public firms. Overall, we find no evidence of an RPE effect or any asymmetry in firms’ use of RPE. The results obtained using Albuquerque’s (2009) method are similar to those...

Agency theory suggests that high pay-performance sensitivity (PPS) of CEO's compensation is an important motivation mechanism to the CEO to improve corporate performance. We develop a simple model that suggests that reverse causality should also be considered. Specifically, our model predicts...