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M&A Decisions and U.S. Firms’ Voluntary Adoption of Clawback Provisions in Executive Compensation Contracts

Brown, Anna Bergman - 2016

We examine whether U.S. firms' M&A decisions influence the likelihood of voluntary adoption of clawback provisions in executive compensation contracts and whether clawback adoption improves subsequent M&A decisions. Because prior research finds that poor M&A decisions are associated with future...

Persistent link: https://www.econbiz.de/10013008597

On the use of nonfinancial performance measures in management compensation

Sliwka, Dirk - 2001

It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic …

Persistent link: https://www.econbiz.de/10011539694

Taxes and the Use of Subjectivity in Executive Bonus Plans

Fox, Zackery D. - 2021

In this study, I examine whether taxes influence the design of executive compensation incentives. Recently, the Tax Cuts and Jobs Act (TCJA) removed the requirement that bonus plans be tied to objective and verifiable performance measures for the bonus to be tax deductible. A potential...

Persistent link: https://www.econbiz.de/10013220378

Executive Compensation Incentives Contingent on Long-Term Accounting Performance

Li, Zhi - 2015

The percentage of S&P 500 firms using multi-year accounting-based performance (MAP) incentives to CEOs increased from 16.5% in 1996 to 43.3% in 2008. The use and design of MAP incentives depend on the signal quality of accounting vs. stock performance, shareholder horizons, strategic...

Persistent link: https://www.econbiz.de/10013037100

Executive pay for luck : new evidence over the last 20 years

Choi, Jung Ho; Gipper, Brandon; Shi, Shawn X. - 2020 - Current draft: April 2020

Pay for non-performance is among the most prominent arguments of executive rent extraction, especially Bertrand and Mullainathan's (2001) pay for luck. We revisit their finding over the last two decades, 1997 through 2016. Pay for luck presents in the first decade but declines in the second...

Persistent link: https://www.econbiz.de/10012244497

Internal versus external earnings per share goals and CEO incentives

Armstrong, Christopher; Chau, Jacky; Ittner, Christopher D. - 2017

We examine differences in CEO achievement of EPS goals set separately through analyst forecasts and firm bonus plans. Having different goals for the same performance metric enables us to assess their relative importance in incentivizing CEOs. We find CEOs frequently achieve analyst forecasts,...

Persistent link: https://www.econbiz.de/10011800636

CFO co-option and CEO compensation

Dikolli, Shane S. - 2019

We study whether relative power in the CEO-CFO relationship influences CEO compensation. To operationalize relative power of a CEO over a CFO, we define CFO co-option as the appointment of a CFO after a CEO assumes office. We find that CFO co-option is associated with a CEO pay premium of about...

Persistent link: https://www.econbiz.de/10012903005

Noise Hedging and Executive Compensation

Doherty, Neil A. - 2013

We address two apparent paradoxes of risk management: (1) managers hedge in order to avoid negative earnings surprises …, yet they tend to hedge risks uninformative of the value of the company; and (2) the presence of options in managers … informational asymmetry between insiders (managers) and outsiders (investors). Investors derive information about company value from …

Persistent link: https://www.econbiz.de/10013092522

The Degradation of Distorted Performance Measures

Sloof, Randolph; van Praag, Mirjam - 2008

Baker (2002) has demonstrated theoretically that the quality of performance measures used in compensation contracts hinges on two characteristics: noise and distortion. These criteria, though, will only be useful in practice as long as the noise and distortion of a performance measure can be...

Persistent link: https://www.econbiz.de/10010325988

Sorting Effects of Broad-Based Equity Compensation

Tsui, David - 2020

We examine the sorting role of broad-based equity pay using detailed employee-level data. We propose trust in management as an important and beneficial characteristic over which equity pay sorts employees, as such pay typically leaves employees with concentrated positions in employer stock and...

Persistent link: https://www.econbiz.de/10012851565