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David F Larcker - One of the best experts on this subject based on the ideXlab platform.

  • peer group choice and chief Executive Officer compensation
    Research Papers, 2019
    Co-Authors: David F Larcker, Charles Mcclure
    Abstract:

    We examine the selection of peer groups that boards of directors use when setting the level of CEO compensation. This choice is controversial because it is difficult to ascertain whether peer groups are selected to (i) attract and retain top Executive talent or (ii) enable rent extraction by inappropriately increasing CEO compensation. In contrast to prior research, our analysis utilizes the degree to which the observed compensation level of peers in the portfolio is unusual relative to all potential portfolios of peers the board of directors could have reasonably selected. Using a sample of 10,235 firm-year observations from 2008 to 2014, we estimate roughly 33% of board of directors’ choices appear to be associated with rent extraction, whereas the remaining 67% are associated with attracting and retaining high-quality CEO talent. Relative to firms that appear to select peers for aspirational labor market reasons, we find rent extraction firms have more structural governance concerns and realized negative governance outcomes. Over our sample period, we estimate the aggregate excess pay for rent extraction firms is approximately $5.4 billion, or 38% of their total pay.

  • chief Executive Officer equity incentives and accounting irregularities
    Journal of Accounting Research, 2010
    Co-Authors: Christopher S Armstrong, Alan D Jagolinzer, David F Larcker
    Abstract:

    This study examines whether Chief Executive Officer (CEO) equity-based holdings and compensation provide incentives to manipulate accounting reports. While several prior studies have examined this important question, the empirical evidence is mixed and the existence of a link between CEO equity incentives and accounting irregularities remains an open question. Because inferences from prior studies may be confounded by assumptions inherent in research design choices, we use propensity-score matching and assess hidden (omitted variable) bias within a broader sample. In contrast to most prior research, we do not find evidence of a positive association between CEO equity incentives and accounting irregularities after matching CEOs on the observable characteristics of their contracting environments. Instead, we find some evidence that accounting irregularities occur less frequently at firms where CEOs have relatively higher levels of equity incentives.

  • stock options and chief Executive Officer compensation
    2007
    Co-Authors: Christopher S Armstrong, David F Larcker, Chelin Su
    Abstract:

    Although stock options are commonly observed in chief Executive Officer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific data and we find that stock options are almost always part of the optimal contract. This result is robust to alternative assumptions about the level of CEO risk-aversion and the disutility associated with their effort. In a supplementary analysis, we solve for the optimal contract when there are no restrictions on the contract space. We find that the optimal contract (which is characterized as a state-contingent payoff to the CEO) typically has option-like features over the most probable range of outcomes.Paper published as: "Endogenous Selection and Moral Hazard in Compensation Contracts" in Operations Research, Linthicum 58 (July/August 2010): 1090-1106.

  • Corporate governance, chief Executive Officer compensation, and firm performance
    Journal of Financial Economics, 1999
    Co-Authors: John E. Core, Robert W. Holthausen, David F Larcker
    Abstract:

    We find that measures of board and ownership structure explain a significant amount of cross-sectional variation in CEO compensation, after controlling for standard economic determinants of pay. Moreover, the signs of the coefficients on the board and ownership structure variables suggest that CEOs earn greater compensation when governance structures are less effective. We also find that the predicted component of compensation arising from these characteristics of board and ownership structure has a statistically significant negative relation with subsequent firm operating and stock return performance. Overall, our results suggest that firms with weaker governance structures have greater agency problems; that CEOs at firms with greater agency problems receive greater compensation; and that firms with greater agency problems perform worse.

Renee Caruthers - One of the best experts on this subject based on the ideXlab platform.

Nina T Dorata - One of the best experts on this subject based on the ideXlab platform.

  • corporate governance and chief Executive Officer compensation
    Corporate Governance, 2008
    Co-Authors: Steven T Petra, Nina T Dorata
    Abstract:

    Purpose – This paper aims to examine whether there is an association between the level of performance‐based incentives offered to CEOs and the composition of firms' boards of directors and the compensation committee.Design/methodology/approach – Univariate tests are used to test the relation between the level of performance‐based incentives and corporate governance structures. A logistic regression analysis is used to predict the probability of CEOs receiving low performance‐based incentives when various characteristics of firms' boards of directors and compensation committees exist.Findings – The authors find the presence of CEO duality reduces the likelihood of lower levels of performance‐based incentives offered to CEOs. Additionally, the authors find CEOs are more likely to receive lower levels of performance‐based incentives when the majority of the compensation committee members serve on less than three other boards, and when the size of the board is less than or equal to nine members.Research limit...

Demetrius J Porche - One of the best experts on this subject based on the ideXlab platform.

  • chief Executive Officer the need to be healthy
    American Journal of Men's Health, 2013
    Co-Authors: Demetrius J Porche
    Abstract:

    In fact, some research has suggested that being overweight or obese affects the chief Executive Officer’s perceived leadership ability and job-related stamina. In addition, some literature suggests that there is an increased perception that chief Executive Officers who are overweight or obese are considered less effective in their job-related responsibilities. These perceptions indicate that the current obesity epidemic in our country is now affecting workplace perceptions and may indirectly or directly affect perceived effectiveness of individuals in key leadership positions. Perception may not be factual, but perception is definitely considered “real” to the individual who is the perceiver. Competence perception is not the same as measurable leadership outcomes for chief Executive Officers, but is something that is critical. Therefore, even if these beliefs are not based on evidence,

John E. Core - One of the best experts on this subject based on the ideXlab platform.

  • Corporate governance, chief Executive Officer compensation, and firm performance
    Journal of Financial Economics, 1999
    Co-Authors: John E. Core, Robert W. Holthausen, David F Larcker
    Abstract:

    We find that measures of board and ownership structure explain a significant amount of cross-sectional variation in CEO compensation, after controlling for standard economic determinants of pay. Moreover, the signs of the coefficients on the board and ownership structure variables suggest that CEOs earn greater compensation when governance structures are less effective. We also find that the predicted component of compensation arising from these characteristics of board and ownership structure has a statistically significant negative relation with subsequent firm operating and stock return performance. Overall, our results suggest that firms with weaker governance structures have greater agency problems; that CEOs at firms with greater agency problems receive greater compensation; and that firms with greater agency problems perform worse.