Incentive effects of executive compensation and the valuation of firm assets

Journal of Corporate Finance

Volumn 16, Issue 4, 2010, Pages 431-442

  O'Connor, Matthew L ^a   Rafferty, Matthew ^a  

^a QUINNIPIAC UNIVERSITY   (United States)

Author keywords

Asset valuation; Executive compensation; Incentive effects

Indexed keywords

EID: 77955172612     PISSN: 09291199     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jcorpfin.2010.04.001     Document Type: Article

References (37)

1. Agrawal A., Mandelker G. Managerial incentives and corporate investment and financing decisions. J. Finance 1987, 42:823-837.
2. Arellano M., Bond S. Some tests of specification for panel data: Monte carlo evidence and an application to employment equations. Rev. Econ. Stud. 1991, 58:277-297.
3. Arellano M., Bover O. Another look at the instrumental variable estimation of error-components models. J. Econom. 1995, 68:29-51.
4. Blundell R., Bond S. Initial conditions and moment restrictions in dynamic panel data models. J. Econom. 1998, 87:115-143.
5. Blundell R., Griffith R., van Reenen J. Market share, market value and innovation in a panel of British manufacturing firms. Rev. Econ. Stud. 1999, 66:529-554.
6. Coles J., Daniel N., Naveen L. Managerial incentives and risk taking. J. Financ. Econ. 2006, 79:431-468.
7. Core J., Guay W. Estimating the value of employee stock option portfolios and their sensitivities to price and volatility. J. Acc. Res. 2002, 40:613-630.
8. Demsetz H., Lehn K. The structure of corporate ownership: causes and consequences. J. Polit. Econ. 1985, 93:1155-1177.
9. Demsetz H., Villalonga B. Ownership structure and corporate performance. J. Corp. Finance 2001, 7:209-233.
10. Dittmann I., Maug E. Lower salaries and no options? On the optimal structure of executive pay. J. Finance 2007, 42:303-343.
11. Griliches Z. Market value, R&D and patents. Econ. Lett. 1981, 7:183-187.
12. Griliches Z., Hausman J. Errors in variables in panel data. J. Econom. 1986, 31:93-118.
13. Grossman S., Hart O. An analysis of the principal-agent problem. Econometrica 1983, 51(1):7-45.
14. Guay W. The sensitivity of CEO to equity risk: an analysis of the magnitude and determinants. J. Financ. Econ. 1999, 53:43-71.
15. Habib M., Ljungqvist A. Firm value and managerial incentives: a stochastic frontier approach. J. Bus. 2005, 78:2053-2093.
16. Hall B. Innovation and market value. Productivity, Innovation, and Economic Performance 2000, 177-198. Cambridge University Press, New York. R. Barrel, G. Mason, M. O'Mahony (Eds.).
17. Hall B., Oriani R. Does the market value R&D investment by European firms? Evidence from a panel of manufacturing firms in France, Germany, and Italy. Int. J. Ind. Organ. 2006, 24:971-993.
18. Hall B., Jaffe A., Trajtenberg M. Market value and patent citations. RAND J. Econ. 2005, 36:16-38.
19. Hanlon M., Rajgopal S., Shevlin T. Are executive stock options associated with future earnings?. J. Acc. Econ. 2003, 36:3-43.
20. Hansen L. Large sample properties of generalized method of moment estimators. Econometrica 1982, 50:1029-1054.
21. Harris M., Raviv A. Optimal incentive contracts with imperfect information. J. Econ. Theory 1979, 20:231-259.
22. Haugen R., Senbet L. Resolving the agency problems of external capital through options. J. Finance 1981, 36:629-648.
23. Himmelberg C., Hubbard R.G., Palia D. Understanding the determinants of managerial ownership and the link between ownership and performance. J. Financ. Econ. 1999, 53:353-384.
24. Holmstrom B. Moral hazard and observability. Bell J. Econ. 1979, 10:74-79.
25. Holtz-Eakin D., Newey W., Rosen H. Estimating vector autoregressions with panel data. Econometrica 1988, 56:1371-1395.
26. Jensen M., Meckling W. Theory of the firm: managerial behavior, agency costs, and ownership structure. J. Financ. Econ. 1976, 3:305-360.
27. Jensen M., Murphy K. Performance pay and top-management incentives. J. Polit. Econ. 1990, 98:225-264.
28. Ju, N., Leland, H., Senbet, L., 2002. Options, option repricing and severance packages in managerial compensation: their effects on corporate risk and dividend policies. Unpublished working paper, University of Maryland.
29. Lewellen K. Financing decisions when managers are risk averse. J. Financ. Econ. 2006, 82:551-589.
30. Lublin J. Valeant's CEO package draws praise as a model. Wall St. J. 2009, (August 24), B4.
31. McConnell J., Servaes H. Additional evidence on equity ownership and corporate value. J. Financ. Econ. 1990, 27:595-612.
32. Morck R., Shleifer A., Vishny R. Management ownership and market valuation: an empirical analysis. J. Financ. Econ. 1988, 20:293-315.
33. Oriani R., Sobrero M. A meta-analytic study of the relationship between R&D investments and corporate value. Corporate Governance, Market Structure, and Innovation 2003, 177-199. Elgar, Northhampton, MA. M. Calderini, P. Garrone, M. Sobrero (Eds.).
34. Palia D. The endogeneity of managerial compensation in firm valuation: a solution. Rev. Financ. Stud. 2001, 14:735-764.
35. Parrino R., Poteshman A., Weisbach M. Measuring investment distortions when risk-averse managers decide whether to undertake risky projects. Financ. Manage. 2005, 34:21-60.
36. Roodman, D., 2006. How to do xtabond2? An introduction to 'difference' and 'system' GMM in Stata. Unpublished worker paper #103, Center for Global Development.
37. Ross S. Compensation, incentives, and the duality of risk aversion and riskiness. J. Finance 2004, 59:207-225.