CEO compensation and real estate prices: pay for luck or pay for action?

• 成果类型: Article
• 署名作者: Albuquerque, Ana; Bennett, Benjamin; Custodio, Claudia; Cvijanovic, Dragana
• 署名单位: Boston University; Tulane University; Imperial College London
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-022-09700-5
• 发表日期: 2023
• 页码: 2401-2447
• 关键词: CORPORATE GOVERNANCE; executive-compensation; house prices; Peer groups; AGENCY; STOCK

摘要

This paper uses variation in real estate prices to study Chief Executive Officer (CEO) pay for luck. We distinguish between pay for luck and pay for responding to luck (action) by exploiting US GAAP accounting rules, which mandate that real estate used in the firm's operations is not marked-to-market. This setting allows us to empirically disentangle pay for luck from pay for action, as a change in the value of real estate is only accounted for when the CEO responds to changes in property value. We show that CEO compensation is associated with the following two managerial responses to changes in real estate values: (i) real estate sales and (ii) debt issuance. Overall, we show that CEOs are rewarded for taking value-enhancing actions in response to luck.