CEO deal-making activities and compensation

Journal of Financial Economics

Volumn 114, Issue 3, 2014, Pages 471-492

  Fich, Eliezer M ^a   Starks, Laura T ^b   Yore, Adam S ^c  

^a DREXEL UNIVERSITY   (United States)

^b UNIVERSITY OF TEXAS AT AUSTIN   (United States)

^c NORTHERN ILLINOIS UNIVERSITY   (United States)

Author keywords

Agency problems; Busy boards; Deal making; Executive compensation; Joint ventures; SEOs; Spin offs; Strategic alliances

Indexed keywords

EID: 85027931762     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2014.07.011     Document Type: Article

References (84)

1. Adams R., Almeida H., Ferreira D. Powerful CEOs and their impact on corporate performance. Review of Financial Studies 2005, 18:1403-1432.
2. Ahn S., Denis D.J. Internal capital markets and investment policy: evidence from corporate spin-offs. Journal of Financial Economics 2004, 71:489-516.
3. Ai C., Norton E.C. Interaction terms in logit and probit models. Economics Letters 2003, 80:123-129.
4. Anderson R., Bates T., Bizjak J., Lemmon M. Corporate governance and firm diversification. Financial Management 2000, 29:5-23.
5. Aron D.J. Using the capital market as a monitor: corporate spin-offs in an agency framework. RAND Journal of Economics 1991, 22:505-518.
6. Barber B., Lyon J. Detecting abnormal operating performance: the empirical power and specification of test statistics. Journal of Financial Economics 1996, 41:359-399.
7. Baker M., Savasoglu S. Limited arbitrage in mergers acquisitions. Journal of Financial Economics 2002, 64:91-115.
8. Bebchuk L.A., Cremers M., Peyer U. The CEO pay slice. Journal of Financial Economics 2011, 102:199-221.
9. Bebchuk L.A., Fried J.M. Pay without Performance: The Unfulfilled Promise of Executive Compensation. Cambridge, MA 2004, Harvard University Press.
10. Berger P., Ofek E. Bustup takeovers of value-destroying diversified firms. Journal of Finance 1996, 51:1175-1200.
11. Bettis J.C., Bizjak J., Lemmon M.L. Exercise behavior, valuation, and the incentive effects of employee stock options. Journal of Financial Economics 2005, 76:445-470.
12. Bizjak J., Lemmon M., Naveen L. Does the use of peer groups contribute to higher pay and less efficient compensation?. Journal of Financial Economics 2008, 90:152-168.
13. Bizjak J., Lemmon M., Nguyen T. Are all CEOs above average? An empirical analysis of compensation peer groups and pay design. Journal of Financial Economics 2011, 100:538-555.
14. Bliss R.T., Rosen R.J. CEO compensation and bank mergers. Journal of Financial Economics 2001, 61:107-138.
15. Burch T.R., Nanda V. Divisional diversity and the conglomerate discount: evidence from spin-offs. Journal of Financial Economics 2003, 70:69-98.
16. Bushman R., Chen Q., Engel E., Smith A. Financial accounting information, organizational complexity, and corporate governance systems. Journal of Accounting Economics 2004, 37:167-201.
17. Bushman R., Indjejikian R., Smith A. Aggregate performance measures in business unit manager compensation: the role of intrafirm interdependencies. Journal of Accounting Research 1995, 33:101-128.
18. Carhart M.M. On persistence in mutual fund performance. Journal of Finance 1997, 52:57-82.
19. Chan S., Kensinger J., Keown A., Martin J. Do strategic alliances create value?. Journal of Financial Economics 1997, 46:199-221.
20. Cochran W.G. Sampling Techniques 1963, John Wiley and Sons Inc., New York, NY. second ed.
21. Coles J., Daniel N., Naveen L. Co-opted boards, costs, benefits, causes, and consequences. Review of Financial Studies 2014, 27:1751-1796.
22. Core J., Holthausen R., Larcker D. Corporate governance, chief executive officer compensation, and firm performance. Journal of Financial Economics 1999, 51:371-406.
23. DeAngelo H., DeAngelo L., Stulz R. Seasoned equity offerings, market timing, and the corporate life cycle. Journal of Financial Economics 2010, 95:275-295.
24. Dechow P., Sloan R. Executive incentives and the horizon problem: an empirical investigation. Journal of Accounting and Economics 1991, 14:51-89.
25. Denis D.J., Hanouna P., Sarin A. Is there a dark side to incentive compensation?. Journal of Corporate Finance 2006, 12:467-488.
26. Desai M., Foley C., Hines The costs of shared ownership: evidence from international joint ventures. Journal of Financial Economics 2004, 73:323-374.
27. Dodd P., Warner J.B. On corporate governance: a study of proxy contests. Journal of Financial Economics 1983, 11:401-438.
28. Duru A., Reeb D. Geographic and industrial corporate diversification: the level structure of executive compensation. Journal of Accounting, Auditing, & Finance 2002, 17:1-24.
29. Fama E. Agency problems and the theory of the firm. Journal of Political Economy 1980, 88:288-307.
30. Fama E., French K.R. The cross section of expected returns. Journal of Finance 1992, 47:427-465.
31. Faulkender M., Kadyrzhanova D., Prabhala N., Senbet L. Executive compensation: an overview of research on corporate practices and proposed reforms. Journal of Applied Corporate Finance 2010, 22:107-118.
32. Faulkender M., Yang J. Inside the black box: the role and composition of compensation peer groups. Journal of Financial Economics 2010, 96:257-270.
33. Fich E.M., Shivdasani A. Are busy boards effective monitors?. Journal of Finance 2006, 61:689-724.
34. Gabaix X., Landier A. Why has CEO pay increased so much?. Quarterly Journal of Economics 2008, 123:49-100.
35. Galai D., Masulis R. The option pricing model and the risk factor of stock. Journal of Financial Economics 1976, 3:53-82.
36. Garvey G.T., Milbourn T.T. Asymmetric benchmarking in compensation: executives are rewarded for good luck but not penalized for bad. Journal of Financial Economics 2006, 82:197-225.
37. Goodhue, R., Simon, L., 2004. Adverse selection with multiple inputs: mitigating information rents through input control. Unpublished working paper. University of California, Berkeley, CA.
38. Greene W.H. Econometric Analysis 2003, Prentice Hall, Upper Saddle River, NJ.
39. Grinstein Y., Hribar P. CEO compensation and incentives: evidence from M&A bonuses. Journal of Financial Economics 2004, 73:119-143.
40. Harford J., Li K. Decoupling CEO wealth and firm performance: the case of acquiring CEOs. Journal of Finance 2007, 62:917-949.
41. Harris M., Raviv A. A theory of board control and size. Review of Financial Studies 2008, 21:1797-1832.
42. Heckman J. Sample selection bias as a specification error. Econometrica 1979, 47:153-161.
43. Hermalin B., Weisbach M. Endogenously chosen boards of directors and their monitoring of the CEO. American Economic Review 1998, 88:96-118.
44. Higgins M. The allocation of control rights in pharmaceutical alliances. Journal of Corporate Finance 2007, 13:58-75.
45. Hölmstrom B. Moral hazard and observability. Bell Journal of Economics 1979, 10:74-91.
46. Huddart S., Lang M. Employee stock option exercises an empirical analysis. Journal of Accounting and Economics 1996, 21:5-43.
47. Jensen M., Meckling W. Theory of the firm: managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 1976, 3:360-395.
48. Jensen M., Ruback R. The market for corporate control: the scientific evidence. Journal of Financial Economics 1983, 11:5-50.
49. Johnson S.A., Houston M.B. A reexamination of the motives and gains in joint ventures. Journal of Financial and Quantitative Analysis 2000, 35:67-85.
50. Kale P., Dyer J.H., Singh H. Alliance capability, stock market response, and long-term alliance success: the role of the alliance function. Strategic Management Journal 2002, 23:747-767.
51. Kato H., Lemmon M., Luo M., Schallheim J. An empirical examination of the costs and benefits of executive stock options: evidence from Japan. Journal of Financial Economics 2005, 78:435-461.
52. Khalil F., Lawarrée J. Input versus output monitoring: who is the residual claimant?. Journal of Economic Theory 1995, 6:139-157.
53. Krishnaswami S., Subramaniam V. Information asymmetry, valuation, and the corporate spin-off decision. Journal of Financial Economics 1999, 53:73-112.
54. Larcker D., So E., Wang C. Boardroom centrality and firm performance. Journal of Accounting and Economics 2013, 55:225-250.
55. Lazear E.P. The power of incentives. American Economic Review 2000, 90:410-414.
56. Lazear E.P., Rosen S. Rank-order tournaments as optimum labor contracts. Journal of Political Economy 1981, 89:841-864.
57. Lee L.F., Shakespeare C., Walsh J.P. Better than empire: active corporate restructuring and CEO compensation. Unpublished working paper 2012, University of Michigan Ross School of Business, Ann Arbor, MI.
58. Lerner J., Rajan R. NBER conference on corporate alliances. Journal of Financial Economics 2006, 80:1-3.
59. Mantecon T.P., Chatfield R. An analysis of the disposition of assets in a joint venture. Journal of Banking and Finance 2007, 31:2591-2611.
60. Masulis R., Korwar A. Seasoned equity offerings: an empirical investigation. Journal of Financial Economics 1986, 15:91-118.
61. Masulis R., Wang C., Xie F. Corporate governance and acquirer returns. Journal of Finance 2007, 62:1851-1889.
62. Mathews R. Strategic alliances, equity stakes, and entry deterrence. Journal of Financial Economics 2006, 80:35-79.
63. Maxwell W., Rao R. Do spin-offs expropriate wealth from bondholders?. Journal of Finance 2003, 58:2087-2108.
64. Morck R., Shleifer A., Vishny R. Do managerial objectives drive bad acquisitions?. Journal of Finance 1990, 45:31-48.
65. Morse A., Nanda V., Seru A. Are incentive contracts rigged by powerful CEOs?. Journal of Finance 2011, 66:1779-1821.
66. Murphy K.J. Corporate performance and managerial remuneration: an empirical analysis. Journal of Accounting Economics 1985, 7:11-42.
67. Murphy K.J. Executive compensation. Handbook of Labor Economics 1999, North Holland, Amsterdam. O. Ashenfelter, D. Card (Eds.).
68. Murphy K., Zábojník J. CEO pay and appointments: a market-based explanation for recent trends. American Economic Review 2004, 94:192-196.
69. Parrino R. CEO turnover and outside succession: a cross-sectional analysis. Journal of Financial Economics 1997, 46:165-197.
70. Parrino R. Spin-offs and wealth transfers: the Marriott case. Journal of Finance 1997, 43:241-274.
71. Patell J.M. Corporate forecasts of earnings per share and stock price behavior: empirical tests. Journal of Accounting Research 1976, 14:246-274.
72. Perry T., Zenner M. Pay for performance? Government regulation and the structure of compensation contracts. Journal of Financial Economics 2001, 62:453-488.
73. Petersen M. Estimating standard errors in finance panel data sets: comparing approaches. Review of Financial Studies 2009, 22:435-480.
74. Powers E.A. Interpreting logit regressions with interaction terms: an application to the management turnover literature. Journal of Corporate Finance 2005, 11:504-522.
75. Prendergast C. The tenuous trade-off between risk and incentives. Journal of Political Economy 2002, 110:1071-1102.
76. Raith M. Specific knowledge and performance measurement. RAND Journal of Economics 2008, 39:1059-1079.
77. Rose N.L., Shepard A. Firm diversification and CEO compensation: managerial ability or executive entrenchment?. RAND Journal of Economics 1997, 28:489-514.
78. Shivdasani A., Yermack D. CEO involvement in the selection of new board members: an empirical analysis. Journal of Finance 1999, 54:1829-1853.
79. Shleifer A., Vishny R. Management entrenchment: the case of manager-specific investments. Journal of Financial Economics 1989, 25:123-140.
80. Slovin M.B., Sushka M.E., Mantecon T.P. Analyzing joint ventures as corporate control activity. Journal of Banking and Finance 2007, 31:2365-2382.
81. Weisbach M. Outside directors and CEO turnover. Journal of Financial Economics 1988, 20:431-460.
82. Walker M., Yost K. Seasoned equity offerings: what firms say, do, and how the market reacts. Journal of Corporate Finance 2008, 14:376-386.
83. Yermack D. Higher market valuation of companies with a small board of directors. Journal of Financial Economics 1996, 40:185-211.
84. Zhao R. All-or-nothing monitoring. American Economic Review 2008, 98:1619-1628.