Firm expansion and ceo pay
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Author
Contributions
- Grinstein, Yaniv. - Contributor
- John M. Olin Center for Law, Economics, and Business. - Contributor
Publication
2005 - Harvard Law School, Cambridge, MA, Massachusetts
Language
English
Word Count
7,750 words, Guess
Page Count
31 pages
Physical Format
Electronic resource
Identifiers
- Open LibraryOL16251357M
- OCLC Control Number65181938
- Library of Congress Control Number2007615660
Classifications
- LCCK487.E3
Description
"We study the extent to which decisions to expand firm size are associated with increases in subsequent CEO compensation. Controlling for past stock performance, we find a positive correlation between CEO compensation and the CEO's past decisions to increase firm size. This correlation is economically meaningful; for example, other things being equal, CEOs who in the preceding three years were in the top quartile in terms of expanding by increasing the number of shares outstanding receive compensation that is higher by one-third than the compensation of CEOs belonging to the bottom quartile. We also find that stock returns are correlated with subsequent CEO pay only to the extent that they contribute to expanding firm size; only the component of past stock returns not distributed as dividends is correlated with subsequent CEO pay. Finally, we find an asymmetry between increases and decreases in size: while increases in firm size are followed by higher CEO pay, decreases in firm size are not followed by reduction in such pay. The association we find between CEOs' compensation and firm-expanding decisions undertaken earlier during their service couldprovide CEOs with incentives to expand firm size"--John M. Olin Center for Law, Economics, and Business web site.
Subjects
Series Statement
- Discussion paper -- no. 533
Other Editions
- Firm expansion and ceo pay
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