Getting the Incentives Right: Backfilling and Biases in Executive Compensation Data

• 成果类型: Article
• 署名作者: Gillan, Stuart L.; Hartzell, Jay C.; Koch, Andrew; Starks, Laura T.
• 署名单位: University System of Georgia; University of Georgia; University of Texas System; University of Texas Austin; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhx061
• 发表日期: 2018
• 页码: 1460
• 关键词: stock option awards; PAY-PERFORMANCE SENSITIVITY; ceo pay; corporate governance; implicit contracts; firm performance; POWER; determinants; management; IMPACT

摘要

We document that backfilling in the ExecuComp database introduces a data-conditioning bias that can affect inferences and make replicating previous work difficult. Although backfilling can be advantageous due to greater data coverage, if not addressed, the oversampling of firms with strong managerial incentives and higher subsequent returns leads to a significant upward bias in abnormal compensation, pay-for-performance sensitivity, and the magnitudes of several previously established relations. The bias also can lead to one misinterpreting the appropriate functional form of a relation and whether the data support one compensation theory over another. We offer methods to address this issue.