Managerial incentives, capital reallocation, and the business cycle

• 成果类型: Article
• 署名作者: Eisfeldt, Andrea L.; Rampini, Adriano A.
• 署名单位: Duke University; Northwestern University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2006.11.007
• 发表日期: 2008
• 页码: 177-199
• 关键词: capital reallocation; ceo turnover; Executive compensation; business cycle

摘要

We argue that when managers have private information about the productivity of assets under their control and receive private benefits, substantial bonuses are required to induce less productive managers to declare that capital should be reallocated. The need to provide incentives for managers to relinquish control links executive compensation to capital reallocation and managerial turnover over the business cycle, rendering them procyclical if expected managerial compensation increases when more managers are hired. Moreover, capital is less productively deployed in downturns because agency costs make reallocation more costly. Empirically, we find that both CEO turnover and executive compensation are remarkably procyclical. (c) 2007 Elsevier B.V. All rights reserved.