Explicit versus Implicit Contracts: Evidence from CEO Employment Agreements

• 成果类型: Article
• 署名作者: Gillan, Stuart L.; Hartzell, Jay C.; Parrino, Robert
• 署名单位: Texas Tech University System; Texas Tech University; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2009.01475.x
• 发表日期: 2009
• 页码: 1629-1655
• 关键词: executive-compensation; managerial power; performance; turnover; cost; pay

摘要

We report evidence on the determinants of whether the relationship between a firm and its Chief Executive Officer (CEO) is governed by an explicit (written) or an implicit agreement. We find that fewer than half of the CEOs of S&P 500 firms have comprehensive explicit employment agreements. Consistent with contracting theory, explicit agreements are more likely to be observed and are likely to have a longer duration in situations in which the sustainability of the relationship is less certain and where the expected loss to the CEO is greater if the firm fails to honor the agreement.