How costly is corporate bankruptcy for the CEO?

• 成果类型: Article
• 署名作者: Eckbo, B. Espen; Thorburn, Karin S.; Wang, Wei
• 署名单位: Dartmouth College; Norwegian School of Economics (NHH); Queens University - Canada; European Corporate Governance Institute; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2016.03.005
• 发表日期: 2016
• 页码: 210-229
• 关键词: Founder-incumbent CEO; Executive labor market; Bankruptcy costs; Forced turnover; ceo compensation

摘要

We examine chief executive officer (CEO) career and compensation changes for large firms filing for Chapter 11. One-third of the incumbent CEOs maintain executive employment, and these CEOs experience a median compensation change of zero. However, incumbent CEOs leaving the executive labor market suffer a compensation loss with a median present value until age 65 of $7 million (five times pre-departure compensation). The likelihood of leaving decreases with profitability and CEO share ownership. Furthermore, creditor control rights during bankruptcy (through debtor-in-possession financing and large trade credits) are associated with CEO career change. Despite large equity losses (median $11 million for incumbents who stay until filing), the median incumbent does not reduce his stock ownership as the firm approaches bankruptcy. (c) 2016 Elsevier B.V. All rights reserved.