Download or read book The Relationship Between Firm Risk and Executive Compensation written by Samuel Ray Gray and published by . This book was released on 1993 with total page 286 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book EXECUTIVE PAY written by William Kline and published by . This book was released on 2013 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three papers examining managerial decision theory, executive compensation, and firm performance. The first paper examines the relationship between executive pay and common equity holdings and risk-adjusted performance; the second paper examines the relationship between executive pay and common equity holdings and strategic decisions, specifically entry mode decisions; and, the third paper develops theory related to the relationship between organizational constitution, valuation constitution, and executive compensation.

Download or read book Executive Compensation and Business Policy Choices at U S Commercial Banks written by Robert DeYoung and published by DIANE Publishing. This book was released on 2010-08 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether and how the terms of CEO compensation contracts at large commercial banks between 1994 and 2006 influenced, or were influenced by, the risky business policy decisions made by these firms. The authors find strong evidence that bank CEOs responded to contractual risk-taking incentives by taking more risk; bank boards altered CEO compensation to encourage executives to exploit new growth opportunities; and bank boards set CEO incentives in a manner designed to moderate excessive risk-taking. These relationships are strongest during the second half of the author¿s sample, after deregulation and technological change had expanded banks' capacities for risk-taking. Charts and tables.

Download or read book The Other Side of the Trade Off written by John E. Core and published by . This book was released on 2011 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: In contrast to a body of research starting with Demsetz and Lehn (1985) that predict and find a strong positive association between firm percent return variance and incentives, Aggarwal and Samwick (1999) predict and find a strong negative association between firm dollar return variance and incentives. A key assumption of Aggarwal and Samwick's analysis is that firm risk is the sole determinant of the pay-performance sensitivity, and that expected dollar return variance (the product of expected percent return variance and firm market value) is the correct proxy for risk. We demonstrate that dollar return variance is a noisy measure of firm market value and argue that Aamp;S re-documents a size effect that is already well-known from prior literature. Because dollar return variance is shown to be a noisy proxy for firm size, the Aamp;S empirical specification does not include an appropriate proxy for firm risk. The data consistently show that it is important to examine market value and percent return variance as separate determinants of the effects of size and risk on CEO incentives, as is done in the managerial ownership literature. In a model of CEO incentives that includes market value and risk as separate explanatory variables, we find that, contrary to the results in Aamp;S, percent return variance is positively associated with incentives. The Aamp;S empirical work cannot be interpreted as evidence of a negative relation between risk and incentives.

Download or read book CEO Option Pay Risk Taking and Firm Performance written by Hussam A. Al-Shammari and published by ProQuest. This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The ever-increasing levels of executive compensation in North America have attracted the growing attention of researchers, policy makers, and the general public. This dissertation reviews the literature on executive compensation and proposes two theoretical models that seek to explain the relationship between CEO option pay, firm risk and performance. Prior empirical research has failed to produce consistent relationships between executive compensation and firm performance. This dissertation opens the "black box" between executive compensation and firm performance and empirically tests the intervening effect of risk-taking behavior on this relationship. It also examines the moderating effects of firm governance systems, strategy and the environment on the relationship between CEO option pay and risk taking. The population for this study is U.S. publicly-traded manufacturing companies. A sample of 204 companies were drawn from the Fortune 1000 for testing the hypothesized relationships. Data were retrieved from various archival sources including Compustat, ExecuComp, Mergent Online, Census for Manufacturing, Thompson Financial, and Value line databases. The dissertation uses both mediated hierarchical regression analyses and moderated hierarchical regression analyses to test the hypothesized relationships suggested in the first and second models, respectively. Results reveal a strong, positive relationship between CEO option pay and a firm's strategic risk, stock returns risk, and income stream risk. Results also showed that firm strategic risk, measured by R & D expenditure, mediates the CEO option pay-firm performance relationship, either fully or partially, depending on which type of performance is being examined. Further, a moderating effect is unveiled for CEO duality, insider ownership, and firm strategy. However, empirical analyses fail to provide adequate evidence to support the expected moderating effect of board independence, institutional and blockholder ownership, and environment.

Download or read book Executive Compensation and Shareholder Value written by Jennifer Carpenter and published by Springer Science & Business Media. This book was released on 2013-04-17 with total page 159 pages. Available in PDF, EPUB and Kindle. Book excerpt: Executive compensation has gained widespread public attention in recent years, with the pay of top U.S. executives reaching unprecedented levels compared either with past levels, with the remuneration of top executives in other countries, or with the wages and salaries of typical employees. The extraordinary levels of executive compensation have been achieved at a time when U.S. public companies have realized substantial gains in stock market value. Many have cited this as evidence that U.S. executive compensation works well, rewarding managers who make difficult decisions that lead to higher shareholder values, while others have argued that the overly generous salaries and benefits bear little relation to company performance. Recent conceptual and empirical research permits for the first time a truly rigorous debate on these and related issues, which is the subject of this volume.

Download or read book The Other Side of the Tradeoff written by Rajesh K. Aggarwal and published by . This book was released on 2003 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Core and Guay (2001) argue that there is an increasing relation between an executive's pay-performance sensitivity (incentives) and firm risk, in contrast to the findings in Aggarwal and Samwick (1999) and the predictions of principal-agent models such as Holmstrom and Milgrom (1987). They claim that including a control variable for firm size in our regression specification reverses the sign of the coefficient on firm risk. We show that their conclusions are based on errors in their empirical work, not the validity of their claim. We re-examine both our original findings and Core and Guay's findings and show that our original findings are quite robust to changes in specification - the relation between pay-performance sensitivity and firm risk is decreasing as predicted by principal-agent theory.

Download or read book Pay Without Performance written by Lucian A. Bebchuk and published by Harvard University Press. This book was released on 2004 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

Download or read book Executive Compensation and Firm Performance written by Bonnie R. Rabin and published by . This book was released on 1987 with total page 304 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book An Introduction to Executive Compensation written by Steven Balsam and published by Academic Press. This book was released on 2002 with total page 410 pages. Available in PDF, EPUB and Kindle. Book excerpt: General readers have no idea why people should care about what executives are paid and why they are paid the way they are. That's the reason that The Wall Street Journal, Fortune, Forbes, and other popular and practitioner publications have regular coverage on them. This book not only proposes a reason - executives need incentives in order to maximize firm value (economists call this agency theory) - it also describes the nature and design of executive compensation practices. Those incentives can take the form of benefits (salary, stock options), or prerquisites (reflecting the status of the executive within the organizational culture.

Download or read book CEO Pay and Firm Performance written by Paul L. Joskow and published by . This book was released on 1994 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores the dynamic structure of the pay-for- performance relationship in CEO compensation and quantifies the effect of introducing a more complex model of firm financial performance on the estimated performance sensitivity of executive pay. The results suggest that current compensation responds to past performance outcomes, but that the effect decays considerably within two years. This contrasts sharply with models of infinitely persistent performance effects implicitly assumed in much of the empirical compensation literature. We find that both accounting and market performance measures influence compensation and that the salary and bonus component of pay as well as total compensation have become more sensitive to firm financial performance over the past two decades. There is no evidence that boards fail to penalize CEOs for poor financial performance or reward them disproportionately well for good performance. Finally, the data suggest that boards may discount extreme performance outcomes -both high and low - relative to performance that lies within some `normal' band in setting compensation.

Download or read book Share based pay and its effects on managerial risk taking written by Patrick Gebhard and published by GRIN Verlag. This book was released on 2013-03-21 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2013 in the subject Business economics - Business Management, Corporate Governance, Technical University of Munich, language: English, abstract: This thesis studies the effects of share-based pay on managerial risk-taking. At first, the relationship between managers and shareholders as predicted by agency theory is described to motivate the use of share-based pay. Then, the influence of manager-specific attributes and compensation design on the risk premium and the risk incentives is discussed Theoretical and empirical research findings are presented and discussed to gain insights into the determinants and effects of stock-based compensation. Last but not least, a descriptive analysis of the payperformance sensitivities of the stock and option portfolios of board members in the German DAX and MDAX in the period of 2006 to 2010 is conducted. Zusammenfassung Die vorliegende Arbeit untersucht die Auswirkungen von aktienkursorientierter Vergütung auf das Risikoverhalten von Managern. Basierend auf den Vorhersagen des Principal- Agenten-Modells wird zunächst die Beziehung zwischen Aktionären und dem Vorstand beschrieben, um die Verwendung aktienkursorientierter Vergütung zu begründen. Darauffolgend wird der Einfluss von managerspezifischen Eigenschaften und der Vergütungsstruktur auf die Risikoprämie und die Risikoanreize dargelegt. Zur Identifizierung der Determinanten und Konsequenzen von aktienkursorientierte Vergütung werden theoretische und empirische Forschungsergebnisse präsentiert und diskutiert. Abschließend wird eine deskriptive Analyse der Unternehmensleistungssensitivitäten von Aktien- und Aktienoptionsportfolios von Vorständen aus DAX und MDAX in der Periode von 2006 bis 2010 durchgeführt.

Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Download or read book The Other Side of the Tradeoff written by Andrew Samwick and published by . This book was released on 1998 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The principal-agent model of executive compensation is of central importance to the modern theory of the firm and corporate governance, yet the existing empirical evidence supporting it is quite weak. The key predication of the model is that the executive's pay-performance sensitivity is decreasing in the variance of the firm's performance. We demonstrate strong empirical confirmation of this prediction using a comprehensive sample of executives at large corporations. In general, the pay-performance sensitivity for executives at firms with the least volatile stock prices is an order of magnitude greater than the pay-performance sensitivity for executives at firms with the most volatile stock prices. This result holds for both chief executive officers and for other highly compensated executives. We further show that estimates of the pay-performance sensitivity that do not explicitly account for the effect of the variance of firm performance are biased toward zero. We also test for relative performance evaluation of executives against the performance of other firms. We find little support for the relative performance evaluation model. Our findings suggest that executive compensation contracts incorporate the benefits of risk-sharing but do not incorporate the potential informational advantages of relative performance evaluation

Download or read book Compensation and Organizational Performance written by Luis R. Gomez-Mejia and published by Routledge. This book was released on 2014-12-18 with total page 366 pages. Available in PDF, EPUB and Kindle. Book excerpt: This up-to-date, research-oriented textbook focuses on the relationship between compensation systems and firm overall performance. In contrast to more traditional compensation texts, it provides a strategic perspective to compensation administration rather than a functional viewpoint. The text emphasizes the role of managerial pay, its importance, determinants, and impact on organizations. It analyzes recent topics in executive compensation, such as pay in high technology firms, managerial risk taking, rewards in family companies, and the link between compensation and social responsibility and ethical issues, among others. The authors provide a thorough and comprehensive review of the vast literatures relevant to compensation and revisit debates grounded in different theoretical perspectives. They provide insights from disciplines as diverse as management, economics, sociology, and psychology, and amplify previous discussions with the latest empirical findings on compensation, its dynamics, and its contribution to firm overall performance.

Download or read book Responsible Executive Compensation for a New Era of Accountability written by Peter T. Chingos and published by John Wiley & Sons. This book was released on 2004-04-12 with total page 322 pages. Available in PDF, EPUB and Kindle. Book excerpt: A definitive road map to help companies assess and refine their executive reward strategies. Responsible pay has become inextricably linked with corporate governance and long-term shareholder value creation. Responsible Executive Compensation for a New Era of Accountability shows you how to revamp your executive compensation programs to drive shareholder value creation while adhering to the high standards of the new corporate governance environment. Packed with case studies, diagnostics, and contributions from world-renowned experts in executive compensation, this vital resource offers a comprehensive overview of the critical issues affecting executive compensation practice and theory during this new era. Order your copy today!

Download or read book Mergers and Acquisitions and Executive Compensation written by Virginia Bodolica and published by Routledge. This book was released on 2015-06-26 with total page 262 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past decades, the total value of executive compensation packages has been rising dramatically, contributing to a wider pay gap between the chief executive officer and the average worker. In the midst of the financial turmoil that brought about a massive wave of corporate failures, the lavish executive compensation package has come under an intense spotlight. Public pressure has mounted to revise the levels and the structure of executive pay in a way that will tie more closely the executive wealth to that of shareholders. Merger and acquisition (M&A) activities represent an opportune setting for gauging whether shareholder value creation or managerial opportunism guides executive compensation. M&As constitute major examples of high-profile events prompted by managers who typically conceive them as a means for achieving higher levels of pay, even though they are frequently associated with disappointing returns to acquiring shareholders. Mergers and Acquisitions and Executive Compensation reviews the existing empirical evidence and provides an integrative framework for the growing body of literature that is situated at the intersection of two highly debated topics: M&A activities and executive compensation. The proposed framework structures the literature along two dimensions, such as M&A phases and firm’s role in a M&A deal, allowing readers to identify three main streams of research and five different conceptualizations of causal relationships between M&A transactions and executive compensation. The book makes a comprehensive review of empirical studies conducted to date, aiming to shed more light on the current and emerging knowledge in this field of investigation, discuss the inconsistencies encountered within each stream of research, and suggest promising directions for further exploration. This book will appeal to researchers and students alike in the fields of organizational behavior and governance as well as accounting and accountability.