NON-PERFORMANCE PAY AND RELATIONAL CONTRACTING: EVIDENCE FROM CEO COMPENSATION

• 成果类型: Article
• 署名作者: DeVaro, Jed; Kim, Jin-Hyuk; Vikander, Nick
• 署名单位: University of Colorado System; University of Colorado Boulder; University of Copenhagen
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/ecoj.12471
• 发表日期: 2018
• 页码: 1923-1951
• 关键词: executive-compensation; implicit contracts; corporate governance; incentive contracts; principals; performance; AGREEMENTS; filter; luck

摘要

CEOs are routinely compensated for aspects of firm performance that are beyond their control. This is puzzling from an agency perspective, which assumes performance pay should be efficient. Working within an agency framework, we provide a rational for this seemingly inefficient feature of CEO compensation by invoking the idea of informal agreements, specifically the theory of relational contracting. We derive observable implications to distinguish relational from formal contracting and, using ExecuComp data, find that CEOs' annual cash and equity incentive payments positively correlate with the cyclical component of sales and respond to measures of persistence as relational contracting theory predicts.