Reputation penalties for poor monitoring of executive pay: Evidence from option backdating

• 成果类型: Article
• 署名作者: Ertimur, Yonca; Ferri, Fabrizio; Maber, David A.
• 署名单位: Columbia University; Duke University; University of Southern California
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2011.12.004
• 发表日期: 2012
• 页码: 118-144
• 关键词: Option backdating; Director labor market; Shareholder voting; Director turnover; corporate governance

摘要

We study whether outside directors are held accountable for poor monitoring of executive compensation by examining the reputation penalties to directors of firms involved in the option backdating (BD) scandal of 2006-2007. We find that, at firms involved in BD, significant penalties accrued to compensation committee members (particularly those who served during the BD period) both in terms of votes withheld when up for election and in terms of turnover, especially in more severe cases of BD. However, directors of BD firms did not suffer similar penalties at non-BD firms, raising the question of whether reputation penalties for poor oversight of executive pay are large enough to affect the ex ante incentives of directors. (C) 2011 Elsevier B.V. All rights reserved.