Asymmetric sensitivity of CEO cash compensation to stock returns

• 成果类型: Article; Proceedings Paper
• 署名作者: Leone, Andrew J.; Wu, Joanna Shuang; Zimmerman, Jerold L.
• 署名单位: University of Rochester; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2006.04.001
• 发表日期: 2006
• 关键词: investment opportunity set; executive-compensation; ACCOUNTING EARNINGS; performance; CONTRACTS; dividend; RISK

摘要

We document that CEO cash compensation is twice as sensitive to negative stock returns as it is to positive stock returns. Since stock returns include both unrealized gains and unrealized losses, we expect cash compensation to be less sensitive to stock returns when returns contain unrealized gains (positive returns) than when returns contain unrealized losses (negative returns). This is consistent with boards of directors exercising discretion to reduce costly ex post settling up in cash compensation paid to CEOs. (c) 2006 Published by Elsevier B.V.