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Essays On Board Of Director Compensation
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Book Synopsis Three Essays on Compensation and the Board of Directors by : Ian Cherry
Download or read book Three Essays on Compensation and the Board of Directors written by Ian Cherry and published by . This book was released on 2015 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt: My second essay concerns the compensation of directors themselves. I find that institutional ownership is positively related to the level of director compensation and the proportion of equity based compensation that directors receive. These results are consistent with the interpretation that institutions prefer stronger links between firm performance and board compensation and are willing to pay higher levels of compensation for better governance. I also investigate the difference between the effects of active versus passive institutional investment and find that active institutions appear to have a larger economic impact on director compensation. However, I do not find a statistical difference between the effects of active and passive ownership.
Book Synopsis Essays on Board of Director Compensation by : Gyoungsin Park
Download or read book Essays on Board of Director Compensation written by Gyoungsin Park and published by . This book was released on 2002 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on the Compensation, Structure, and Decision Making of the Board of Directors by : Duong Thuy Pham
Download or read book Three Essays on the Compensation, Structure, and Decision Making of the Board of Directors written by Duong Thuy Pham and published by . This book was released on 2017 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: My second essay explores the role CEO gender plays in shaping the board of directors. The literature provides strong evidence that male CEOs are more overconfident than female CEOs. I contend that a male CEO, who may overestimate his ability and/or underestimate the monitoring role of the board, will prefer to exert as much control over the board as possible and thus prefer a weaker board. I find consistent results that new male CEOs are more likely to increase board size, decrease board independence, reduce board gender diversification, have worse director attendance and have lower overall board monitoring. In contrast, new female CEOs have more gender diversified boards and are associated with an increase in overall board monitoring intensity. I also find supporting evidence in terms of CEO compensation, where new male CEOs gain more control and are compensated more in both total compensation and equity compensation post transition, consistent with what we expect from a weaker board.
Book Synopsis Three Essays in Executive Compensation by : Randy Beavers
Download or read book Three Essays in Executive Compensation written by Randy Beavers and published by . This book was released on 2015 with total page 167 pages. Available in PDF, EPUB and Kindle. Book excerpt: In essay one, we examine overconfident CEO-directors and find they attend more board meetings, are more active in nominating committees, and have more independent directorships. Attendance is higher when multiple overconfident directors are present on the board. When an overconfident board selects a new CEO after a CEO turnover, they are more likely to appoint a better prepared and more reputable CEO. Overconfident boards are also more likely to select an overconfident CEO. We also find overconfident boards exacerbate the restrained use of debt when an overconfident CEO is present, and we find evidence that the association between CEO-directors and greater CEO pay is driven solely by overconfident CEO-directors on the board. This evidence indicates overconfident CEO-directors exhibit significant influence on the board and over the firm's CEO. In essay two, I analyze the CEO incentives of inside debt in the form of deferred equity compensation in the context of M & A decisions. CEO inside debt holdings are negatively associated with the likelihood of the firm engaging in an M & A. When firms with higher levels of CEO inside debt decide to engage in an acquisition, those acquisitions are non-diversifying, relatively smaller deals, and are paid using a greater portion of stock. The evidence indicates that inside debt incentivizes CEOs to make less risky decisions for the benefit of debt holders and at the expense of shareholders. In essay three, I analyze both CEO inside debt and firm debt jointly to further investigate compensation incentives of risky decision-making and the resulting financial policy decisions concerning the debt structure of the firm. I find larger firms with high CEO inside debt tend to diversify, as calculated by the Herfindahl-Hirschman index of debt type usage. These types of firms use a higher percentage of term loans and other debt but a lower percentage of drawn credit lines and commercial loans. Larger firms with high CEO inside debt have lower interest rates on these debt instruments and shorter maturities, suggesting a more conservative financing policy with regards to debt.
Book Synopsis Essays on the Effect of Excess Compensation and Governance Changes on Firm Value by : Mustafa A. Dah
Download or read book Essays on the Effect of Excess Compensation and Governance Changes on Firm Value written by Mustafa A. Dah and published by . This book was released on 2012 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three essays on the effect of excess compensation and corporate governance changes on the firm's performance. The first paper utilizes a cost minimization stochastic frontier approach to investigate the efficiency of director total compensation. Our findings suggest that board members are over compensated. We show that, on average, the director actual compensation level is above the efficient compensation level by around 63%. Our results suggest that an increase in director excess compensation decreases the likelihood of CEO turnover, reduces the turnover-performance sensitivity, and increases managerial entrenchment. Thus, the surplus in director compensation is directly associated with managerial job security and entrenchment. Furthermore, although director excess compensation is not significantly inversely related to the firm's future performance, it has an indirect negative effect on future performance through its impact on the entrenchment-performance relationship. Therefore, this essay proposes that the overcompensation of directors is directly associated with a board culture predicated by mutual back-scratching and collusion between the CEO and the board members. The second essay tests the effect of an exogenous shock, the Sarbanes-Oxley Act (SOX) of 2002, on the structure of corporate boards and their efficiency as a monitoring mechanism. The results suggest an increase in the participation of independent directors at the expense of insiders. Consequently, we investigate the implications of board composition changes on CEO turnover and firm value. We document a noticeable reduction in CEO turnover in the post-SOX period. We also demonstrate that, after SOX, a board dominated by independent directors is less likely to remove a CEO due to poor performance. Finally, we highlight a negative association between the change in board composition and firm value. We propose that our findings are predicated on an off equilibrium result whereby firms were forced to modify their endogenously chosen board composition. Therefore, contrary to the legislators' objectives, we suggest that the change in board structure brought about inefficient monitoring and promoted an unfavorable tradeoff between independent directors and insiders. The third essay examines the relationship between the firm's governance structure and its value during different economic conditions. We show that both relative industry turnover and CEO entrenchment increase during economic downturns. We also find that relative industry turnover and managerial entrenchment have opposite impacts on the value of the firm throughout the recessionary period. While industry turnover leads to an appreciation in firm value, managerial entrenchment reduces shareholders' wealth. The negative impact of managerial entrenchment on firm value, however, outweighs the positive impact of industry turnover. Accordingly, we propose that a recession provides managers with a good opportunity to camouflage their behavior and extract more private benefits and, thus, blame the poor performance on bad economic conditions.
Book Synopsis Essays on Outside Director Compensation by : Andrew C. Spieler
Download or read book Essays on Outside Director Compensation written by Andrew C. Spieler and published by . This book was released on 2001 with total page 362 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Corporate Governance and Executive Compensation by : Patrick Bernard Washington
Download or read book Essays on Corporate Governance and Executive Compensation written by Patrick Bernard Washington and published by . This book was released on 2016 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is composed of three essays that study the interconnections between blockholders and CEO power, and the link between deferred compensation (inside debt) and financial performance/firm behavior. In the first chapter, I consider agency theory's prediction that a large shareholder, "blockholder," can serve as an effective governance mechanism when monitoring man- agers by reducing CEO dominance. However, not all blockholders are created equally. Inside blockholders with large equity stakes may be subject to CEO influence. Outside blockholders may not fear the same career concerns. Using a novel approach, I sepa- rate blockholders into insiders (officers & directors) and outsiders when considering their relationship to CEO power, which is proxied by the CEO Pay Slice (CPS). However, separating blockholders into outside and officer specifications reveals that director block- holders reduce CEO power. Economic theory suggests that firms with multiple classes of shares have weak governance structures. A significant difference in CEO dominance inside dual class share firms versus single class share firms has been documented. This paper expounds on previous research and shed's light on the effect of insiders' differential shareholder rights in dual class share firms. Evidence is provided that shows as insiders' percentage of voting rights increase then CEO power (CPS) decreases. Also, the results reveal that as insiders' percentage of cash flow rights increase then CEO power (CPS) increases. In the second chapter, I study recent literature's documentation that inside debt is widely used in executive compensation contracts. Prior research has only focused on the CEO's level of inside debt. However, the inner workings of the top executive team, and their importance for firm performance are difficult to observe and measure. In this essay, I aim to contribute to the subject by introducing new measures pertaining to the rela- tionship between the CEO and the other members of the top executive team, as well as studying the relation between these measures and the value, performance, and behavior of public firms. My novel measure is the Slice of CEO Inside Debt (SCID) -- the frac- tion of the aggregate deferred compensation (inside debt) of the top-five executive team captured by the CEO. The effects of total deferred compensation account balances, firm contributions, executive contributions, and earnings on deferred compensation accounts are examined with respect to SCID. This research provides evidence of increased CEO tenure (entrenchment) in relation to the earnings measure of SCID, reduced spending on research and development in relation to the earnings measure of SCID, increased spend- ing on capital expenditures in relation to the executive contributions measure of SCID, and a lower probability of bankruptcy in relation to the executive contributions measure of SCID. Also, this paper shows that as the CEO's slice of deferred compensation from firm contributions and executive contributions increases then firm liquidity, i.e. working capital, decreases. In the final chapter, I consider prior research that has shown firms with CEOs who have less power take less risk. Thus, theory suggests that reducing CEO power through the use of deferred compensation, "inside debt," should motivate executives to become more risk averse. This essay investigates the relationship between the Slice of CEO Inside- Debt (SCID) — the fraction of the aggregate deferred compensation (inside debt) of the top-five executive team captured by the CEO — and CEO power (CPS--CEO Pay Slice) and corporate social responsibility (CSR). The effects of firm contributions, executive contributions, and earnings on deferred compensation accounts are examined with respect to SCID in relation to CPS and CSR. This research provides evidence of increased CEO power by showing that firms with CEOs who contribute more money to their deferred compensation accounts relative to the total amount deferred by the top five executives, including the CEO, have CEOs with greater power in the following year. Additionally, this essay studies firms use of inside debt and its effect on corporate social responsibility. Empirical evidence is provided that firms with CEOs who experience increased earnings on their deferred compensation accounts relative to the account earnings of top five executives are positively correlated with being more socially responsible.
Book Synopsis Two Essays on Corporate Governance by : Minhua Yang
Download or read book Two Essays on Corporate Governance written by Minhua Yang and published by . This book was released on 2009 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation is composed by two essays that explore the changes in corporate governance around the passage of Sarbanes-Oxley (SOX) 2002. In the first essay, I examine the relation between board structure and compensation as a bargaining game between the board and the CEO. Bargaining game theories describe an endogenous process of determining the structure of director and CEO compensation. The Sarbanes-Oxley Act (SOX) altered the equilibrium of power between the board and CEO by changing the monitoring role of the board. SOX essentially provides a natural experiment to test how a shock to the bargaining game alters the balance of power between directors and the CEO. Using the ratio of director compensation to CEO compensation to proxy for bargaining power, I find a significant increase following the passage of SOX, consistent with directors gaining bargaining advantage. Moreover, firms with strong shareholder rights exhibit even greater evidence of power shifting to the directors. Overall, the results suggest that directors gain more power relative to the CEO in determining compensation plans and strong shareholder rights help firms to align directors' incentives with those of shareholders. In the second essay, I examine the relation between CEO compensation structure and acquirer returns. In the literature, researchers find that executive compensation structures influence corporate acquisition decisions. Equity-based executive compensation should reduce the non-value-maximizing behavior of acquiring managers. A series of corporate reforms such as SOX and the FASB expensing rule affected the structure of CEO equity-based compensation. I find a significant increase in CEO restricted stock compensation and a significant decrease in CEO option-based compensation following these reforms. I also find that CEOs with strong managerial power are more likely to receive more restricted stock in their compensation package after the 2002 reforms. Finally, I find a significant positive relation between the restricted stock compensation of acquiring firm CEOs and abnormal stock returns after 2002. This provides empirical support on the effectiveness of the shift away from options towards restricted stock in executive compensation packages. Restricted stock is associated with better merger decisions.
Book Synopsis Two Essays on CEO Compensation by : Sooyoung Song
Download or read book Two Essays on CEO Compensation written by Sooyoung Song and published by . This book was released on 2000 with total page 302 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays in Executive Compensation and Corporate Governance by : Swarnodeep Homroy
Download or read book Three Essays in Executive Compensation and Corporate Governance written by Swarnodeep Homroy and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Two Essays on Corporate Governance - are Local Directors Better Monitors, and Directors Incentives and Earnings Management by : Hong Wan
Download or read book Two Essays on Corporate Governance - are Local Directors Better Monitors, and Directors Incentives and Earnings Management written by Hong Wan and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: ABSTRACT: Previous literature have documented that the independent directors play a crucial goal in corporate governance but the research on the firm value and board independence remains inconclusive. In my dissertation, I examine the impact of independent directors' geographic proximity to corporate headquarters on the effectiveness of corporate boards and the motivations of board directors. Using a large sample of directors trading, I show that independent directors who live close to headquarters ("local director") earn higher abnormal returns on their trades than other directors, and that this advantage is stronger in small firms. Further, I find an inverse relationship between the number of local independent directors on the board and firm value. Companies with fewer local independent directors also have higher ROA ratios, lower abnormal CEO compensations, and higher CEO incentive compensations. Collectively, the findings suggest that local independent directors are more informed but less effective monitors. I also provided evidence that firms with a higher proportion of directors' incentive compensation are more likely to manage earnings. Directors are more likely to exercise options in the year following the firms' earnings management being in the top tercile of the sample. The results are robust after controlling for self-selection bias. Taken together, the evidence suggests that director incentive pay is more likely to align directors' interest with the CEO's, rather than to induce the directors to act in the best interest of the shareholders.
Book Synopsis Essays on Compensation by : David A. Maber
Download or read book Essays on Compensation written by David A. Maber and published by . This book was released on 2009 with total page 360 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation consists of three studies on the determinants of compensation. The first two chapters examine the compensation of sell-side equity research professionals. The first paper uses proprietary data from a mid-market investment bank for the years 2004-2007 to investigate how cross sectional variation in junior researchers' carrer aspirations and human capital characteristics (education, tenure, and outside work experience) is related to cross-sectional variation in their performance and remuneration. Chapter 2 examines the compensation of senior sell-side equity researchers. Using proprietary data from a leading investment bank for the years 1988-2005, we show that three factors drive the compensation of senior equity research professionals: the researcher's customer satisfaction ratings, the scale of the researcher's portfolio, and the researcher's contributions to the firm's investment banking operations. Chapter 3 examines the effect of shareholder voting rights on executive compensation design. Specifically, we examine the effect on CEO pay of new legislation introduced in the United Kingdom (UK) at the end of 2002 that mandates an annual, nono-binding shareholder vote ("say on pay") on the executive pay report prepared by the board of directors.
Book Synopsis Essays in Corporate Governance by : Houston Shawn Mobbs
Download or read book Essays in Corporate Governance written by Houston Shawn Mobbs and published by . This book was released on 2008 with total page 356 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Three Essays on Corporate Governance and Control by : Susan Christine Sassalos
Download or read book Three Essays on Corporate Governance and Control written by Susan Christine Sassalos and published by . This book was released on 1994 with total page 198 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays in Empirical Corporate Finance by : Feng Jiang
Download or read book Essays in Empirical Corporate Finance written by Feng Jiang and published by . This book was released on 2012 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt: Furthermore, acquirers with investment banker directors on the board have significantly higher announcement returns, especially if the deal is relatively large and the bankers' experience and/or network is current. We also find evidence that investment banker directors help reduce the takeover premium and advisory fees paid to outside consultants. Finally, the presence of investment banker directors is positively related to long-run operating and stock performance. Lastly, in the third essay, we study whether firms strategically alter CEO compensation to improve their bargaining position with labor unions. We conjecture that (i) firms in heavily unionized industries offer lower compensation packages to their CEOs than do their non-union counterparts, (ii) unionized firms temporarily curtail CEO compensation before union contract negotiations, and (iii) the curtailment in compensation is most pronounced for option grants due to their discretionary nature. Our results support these conjectures. We also find that CEOs are more likely to sacrifice compensation if they hold a relatively large stake in the company whose value depends on the contract negotiations. Finally, we report evidence that curtailing CEO compensation helps reduce the negotiated salary growth.
Book Synopsis Hard Lessons in Corporate Governance by : Bryce C. Tingle
Download or read book Hard Lessons in Corporate Governance written by Bryce C. Tingle and published by Cambridge University Press. This book was released on 2024-05-30 with total page 315 pages. Available in PDF, EPUB and Kindle. Book excerpt: Examines how and why modern corporate governance practices fail to deliver better economic, managerial, environmental, or social outcomes.
Book Synopsis Essays on Director Industry Experience by :
Download or read book Essays on Director Industry Experience written by and published by . This book was released on 2015 with total page 428 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation, comprised of three interrelated papers, aims at shedding light on the consequences of having industry-experienced outside directors on the board. The first paper (co-authored with David Oesch and Markus Schmid) links the industry experience of an appointed outside director to the stock market reaction observed around the announcement of the appointment. The second paper extends the scope of the analysis of the first paper along a number of dimensions. First, both time and firm sample under investigation are broadened. Second, the focus of the analysis shifts from the individual director level to the overall board level. The paper therefore relates the industry experience of the entire board to firm value as well as to operating policies chosen by firms. The third paper links board industry experience to executive compensation, thereby evaluating whether boards of directors with more industry experience help to reduce agency costs between managers and shareholders by means of managerial incentives.
