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Executive Pay Earnings Manipulation And Shareholder Litigation
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Book Synopsis Executive Pay, Earnings Manipulation and Shareholder Litigation by : Ailsa Röell
Download or read book Executive Pay, Earnings Manipulation and Shareholder Litigation written by Ailsa Röell and published by . This book was released on 2006 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the impact of executive compensation on private securities litigation. We find that incentive pay in the form of options increases the probability of securities class action litigation, holding constant a wide range of firm characteristics. We further document that there is abnormal upward earnings manipulation during litigation class periods and that insiders exercise more options and sell more shares during class periods, but that this activity is largely driven by pre-existing option holdings of the managers. Our results suggest that option-based compensation may have the unintended side effect of giving executives an incentive to focus excessively on the short term share price.
Book Synopsis Executive Pay and Shareholder Litigation by : Lin Peng
Download or read book Executive Pay and Shareholder Litigation written by Lin Peng and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines the impact of executive compensation on private securities litigation. We find that incentive pay in the form of options increases the probability of securities class action litigation, holding constant a wide range of firm characteristics. We further document that there is abnormal upward earnings manipulation during litigation class periods and that insiders exercise more options and sell more shares during class periods, but that this activity is largely driven by pre-existing option holdings of the managers. Our results suggest that option-based compensation may have the unintended side effect of giving executives an incentive to focus excessively on the short term share price.
Book Synopsis Executive Pay, Earnings Mainopulation and Shareholder Litigation by : Lin Peng
Download or read book Executive Pay, Earnings Mainopulation and Shareholder Litigation written by Lin Peng and published by . This book was released on 2003 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun
Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by DIANE Publishing. This book was released on 2010-08 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. Examines how the opportunity to manipulate affects the optimal pay contract, and establishes necessary and sufficient conditions under which earnings management occurs. The author¿s model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations. Charts and tables.
Book Synopsis Pay without Performance by : Lucian Bebchuk
Download or read book Pay without Performance written by Lucian Bebchuk and published by Harvard University Press. This book was released on 2006-09-30 with total page 293 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.
Book Synopsis Corporate Governance, Executive Compensation and Securities Litigation by : Eric L. Talley
Download or read book Corporate Governance, Executive Compensation and Securities Litigation written by Eric L. Talley and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: It is generally accepted that good corporate governance, executive compensation and the threat of litigation are all important mechanisms for incentivizing managers of public corporations. While there are significant and robust literatures analyzing each of these policy instruments in isolation, their mutual relationship and interaction has received somewhat less attention. Such neglect is mildly surprising in light of a strong intuition that the three devices are structurally related to one another (either as complements or substitutes). In this paper, we construct an agency cost model of the firm in which corporate governance protections, executive compensation levels, and litigation incentives are all endogenously determined. We then test the predictions of the model using a firm-level data set including governance, executive compensation, and securities litigation variables. Consistent with our predictions, we find governance and compensation to be structural substitutes with one another, so that more protective governance structures tend to coincide with lower-powered incentives in executive contracts. Also consistent with our predictions, we find executive compensation and shareholder litigation appear to be structural complements to one another, so that higher powered incentives tend to catalyze more frequent litigation. In fact, we estimate that each 1% increase in the incentive component of a CEO's contract predicts 0.3% increase in the likelihood of a securities class action and a $3.4 million dollar increase in expected settlement costs. In addition, the complementarity of executive compensation and litigation allows us to formulate new ways to test for the effects of legal reform, such as the Private Securities Litigation Reform Act of 1995. The results of our preliminary tests appear inconsistent with the claims of the statute's proponents that the PSLRA systematically discouraged non-meritorious litigation without burdening meritorious claims, particularly for firms with relatively low volatility.
Book Synopsis The Association of Earnings Management with Current Returns, Current Market Values, Future Returns, Executive Compensation and the Likelihood of Being a Target of 10b-5 Litigation by : Christopher L. Jones
Download or read book The Association of Earnings Management with Current Returns, Current Market Values, Future Returns, Executive Compensation and the Likelihood of Being a Target of 10b-5 Litigation written by Christopher L. Jones and published by . This book was released on 1998 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Take on the Street by : Arthur Levitt
Download or read book Take on the Street written by Arthur Levitt and published by Vintage. This book was released on 2002-10-08 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Take on the Street, Arthur Levitt--Chairman of the Securities and Exchange Commission for eight years under President Clinton--provides the best kind of insider information: the kind that can help honest, small investors protect themselves from the deliberately confusing ways of Wall Street. At a time when investor confidence in Wall Street and corporate America is at an historic low, when many are seriously questioning whether or not they should continue to invest, Levitt offers the benefits of his own experience, both on Wall Street and as its chief regulator. His straight talk about the ways of stockbrokers (they are salesmen, plain and simple), corporate financial statements (the truth is often hidden), mutual fund managers (remember who they really work for), and other aspects of the business will help to arm everyone with the tools they need to protect—and enhance—their financial future.
Book Synopsis Explaining Executive Pay by : Lukas Hengartner
Download or read book Explaining Executive Pay written by Lukas Hengartner and published by Springer Science & Business Media. This book was released on 2007-12-31 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: Lukas Hengartner shows that both firm complexity and managerial power are associated with higher pay levels. This suggests that top managers are paid for the complexity of their job and that more powerful top managers receive pay in excess of the level that would be optimal for shareholders.
Book Synopsis Pay Without Performance by : Lucian A. Bebchuk
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.
Book Synopsis Myths and Realities of Executive Pay by : Ira Kay
Download or read book Myths and Realities of Executive Pay written by Ira Kay and published by Cambridge University Press. This book was released on 2007-08-27 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book answers the question 'Are CEOs overpaid?' with a resounding 'No.' Defying dogma and business myths, it documents the realities of executive pay in the United States and the forces that have shaped pay in recent years. The authors, both expert consultants on the subject, investigate the extent to which pay is related to corporate performance and provide clear guidance for an approach that drives business success and shareholder value. Based on extensive research and decades of direct experience in working with thousands of companies, the book provides provocative insights for executives, analysts, government officials, and shareholders.
Book Synopsis Compensation Committee Handbook by : James F. Reda
Download or read book Compensation Committee Handbook written by James F. Reda and published by Wiley. This book was released on 2004-10-27 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Second Edition provides a comprehensive review of the issues facing compensation committees and covers functional issues such as organising, planning, and best practice tips. Compliance advice on the implications of Sarbanes-Oxley and other regulations is addressed along with new requirements on disclosures of financial transactions involving management and principal stockholders.
Book Synopsis The Handbook of the Economics of Corporate Governance by : Benjamin Hermalin
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
Book Synopsis Restatements and Shareholder Litigation by : Nana Y. Amoah
Download or read book Restatements and Shareholder Litigation written by Nana Y. Amoah and published by . This book was released on 2008 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate governance and equity compensation have increasingly become the focus of attempts to restore investor confidence and mitigate adverse consequences of corporate reporting failures. However, the question of whether corporate governance and equity compensation influence the likelihood of restatement-related class action lawsuit and the valuation effect around restatements and restatement-related class actions has not been resolved. Using a sample from 1997-2002, I examine whether corporate governance and equity compensation measures explain the cross-sectional variation in announcement returns around restatement and restatement-related class action announcements. I also investigate the influence of equity compensation and corporate governance measures on the likelihood of restatement-related shareholder litigation. Cross-sectional regressions of announcement returns show that the market reacts more negatively to restatement and restatement-related class action announcements when restating firms offer higher equity compensation to their CEOs. There is also evidence of a more negative market reaction to class action announcements when restating firms do not have fully independent audit committees. Logistic regressions of the probability of restatement-related class action lawsuit indicate that restating firms with more independent boards are less likely to experience restatement-related shareholder litigation. Investigation of the influence of corporate governance and equity compensation measures on the merit of restatement-related shareholder litigation indicates that the higher the CEO's equity compensation, the lower the likelihood that the class action lawsuit would be dismissed. This study makes significant contributions to the literature. It is the first study that directly examines the impact of CEO equity compensation on the market's reaction to restatement and restatement-related class action announcements and the results support the view that CEO equity compensation increases information asymmetry between insiders and outsiders. This study also adds to the literature by showing that shareholders are more likely to initiate restatement-related class actions when restating firms have less independent boards. The findings are important to regulators, investors, academics and others who argue that corporate governance and equity compensation influence the adverse consequences of restatements. The results are also beneficial to regulators and policymakers who are concerned with improving investor confidence in the capital markets and reducing the incidence of restatement-related shareholder litigation.-- Abstract.
Book Synopsis The Corporate Governance of Banks by : Ross Levine
Download or read book The Corporate Governance of Banks written by Ross Levine and published by World Bank Publications. This book was released on 2004 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Levine examines the corporate governance of banks. When banks efficiently mobilize and allocate funds, this lowers the cost of capital to firms, boosts capital formation, and stimulates productivity growth. So, weak governance of banks reverberates throughout the economy with negative ramifications for economic development. After reviewing the major governance concepts for corporations in general, the author discusses two special attributes of banks that make them special in practice: greater opaqueness than other industries and greater government regulation. These attributes weaken many traditional governance mechanisms. Next, he reviews emerging evidence on which government policies enhance the governance of banks and draws tentative policy lessons. In sum, existing work suggests that it is important to strengthen the ability and incentives of private investors to exert governance over banks rather than to rely excessively on government regulators. These conclusions, however, are particularly tentative because more research is needed on how legal, regulatory, and supervisory policies influence the governance of banks. This papera product of the Global Corporate Governance Forum, Corporate Governance Departmentis part of a larger effort in the department to improve the understanding of corporate governance reform in developing countries"-- World Bank web site.
Book Synopsis Winning Investors Over by : Baruch Lev
Download or read book Winning Investors Over written by Baruch Lev and published by Harvard Business Press. This book was released on 2012 with total page 394 pages. Available in PDF, EPUB and Kindle. Book excerpt: A guide to dealing with Wall Street in order to boost a company's earnings and stock price features advice for executives on such topics as addressing investors' concerns and maintaining credibility on Wall Street.
Book Synopsis SEC News Digest by : United States. Securities and Exchange Commission
Download or read book SEC News Digest written by United States. Securities and Exchange Commission and published by . This book was released on 1971-07 with total page 504 pages. Available in PDF, EPUB and Kindle. Book excerpt: Lists documents available from Public Reference Section, Securities and Exchange Commission.
