We examine the potential confounding effects that awarding outside directors stock options may have on the quality of financial disclosure. By aligning their interests with those of shareholders, directors should be more inclined to monitor and disclose relevant information to investors....

This paper examines the effect of hierarchical pay structures on firm value in firms where CEOs are not the highest paid members of the top management teams. We find that the difference in pay between CEO and VPs benefits firm value only when CEO is the highest paid member of the top management...

Public outrage over executive compensation reached an all time high during the financial crisis. Around the world, many argued that CEOs and boards were immoral in setting their pay and pressured governments to impose restrictions on executive pay. Using a unique sample of data on human values...

It is controversial whether governance structure affects the value of the firm. This paper examines the sensitivity of firm value to capital expenditure under various levels of CEO power. The paper uses two measures of CEO power and finds that the greater the power of the CEO the less the...

This paper examines some of the implications that technological innovations have had on the retail side of the commercial banking industry in the recent decade. These innovations enabled financial institutions to overcome previous constraining “blockages” to growth and costs savings, such as...

Why do scholars and activists pay such close attention to how executive compensation is structured? Appropriate pay structure has traditionally been seen as a mechanism for reducing agency costs imposed on public firms by managers. But as that view has lost explanatory power in recent years, the...

The relative performance evaluation hypothesis postulates that market-wide and industry-wide performance should not affect the likelihood of CEO involuntary turnover. However, recent academic literature has documented that following poor industry and market performance the likelihood of CEO...

In this study we analyze how CEO risk incentives affect the efficiency of research and development (R&D) investments. We examine a sample of 843 cases where firms increase their R&D investments by an economically significant amount over the period from 1995 to 2006. We find that firms with...

A firm's manager may choose to underperform in the short-term in order to boost subsequent pay: the apparent value of subsequent incentive compensation is diminished, requiring more overall pay to meet the manager's outside option. A greater weight on short-term compensation can counteract these...

This paper analyzes CEO compensation in years around and including exceptionally good and poor performance. Using compensation data from 1993 through 2003, the results suggest CEOs are able to increase their compensation before exceptionally bad performance through the timing of option...