CEO deal-making activities and compensation

• 成果类型: Article
• 署名作者: Fich, Eliezer M.; Starks, Laura T.; Yore, Adam S.
• 署名单位: Drexel University; University of Texas System; University of Texas Austin; Northern Illinois University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2014.07.011
• 发表日期: 2014
• 页码: 471-492
• 关键词: Executive compensation; Agency problems; Busy boards; joint ventures; SEOs; spin-offs; STRATEGIC ALLIANCES; Deal-making

摘要

Using transactions generally overlooked in the compensation literature joint ventures, strategic alliances, seasoned equity offerings (SEOs), and spin-offs we find that, beyond compensation for increases in firm size or complexity, chief executive officers (CEOs) are rewarded for their deal-making activities. Boards pay CEOs for the core motivation of the deal, as well as for deal volume. We find that compensating for volume instead of core value creation occurs under weak board monitoring and that in deal-making firms, neither CEO turnover nor pay-for-performance responds to underperformance. We introduce an input monitoring explanation for these results: boards compensate for deal volume because of their inability to perfectly monitor outputs. (C) 2014 Elsevier B.V. All rights reserved.