Does social capital mitigate agency problems? Evidence from Chief Executive Officer (CEO) compensation

• 成果类型: Article
• 署名作者: Hoi, Chun Keung (Stan); Wu, Qiang; Zhang, Hao
• 署名单位: Rochester Institute of Technology; University of Groningen; Rensselaer Polytechnic Institute
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2019.02.009
• 发表日期: 2019
• 页码: 498-519
• 关键词: Executive compensation; Opportunistic timing; Backdating; Social capital; social norms

摘要

We find that social capital, as captured by secular norms and social networks surrounding corporate headquarters, is negatively associated with levels of CEO compensation. This relation holds in a range of robustness tests including those that address omitted variable bias and reverse causality. Additionally, social capital reduces the likelihood that firms make opportunistic option grant awards that unduly favor CEOs, including lucky awards, backdated awards, and unscheduled awards. Social capital also lessens the accretive effect of CEO power on CEO compensation. These findings indicate that social capital mitigates agency problems by restraining managerial rent extraction in CEO compensation. (C) 2019 Elsevier B.V. All rights reserved.