Abstract

http://ssrn.com/abstract=1572216
 
 

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What Death can Tell: Are Executives Paid for Their Contributions to Firm Value?


Bang Dang Nguyen


University of Cambridge - Judge Business School

Kasper Meisner Nielsen


Hong Kong University of Science & Technology - Department of Finance

March 16, 2010

AFA 2011 Denver Meetings Paper

Abstract:     
An efficient managerial labor market should compensate executives according to their contribution to shareholder value. We provide novel empirical evidence about the relationship between executive pay and managerial contribution to value by exploiting the exogenous variation resulting from stock price reactions to sudden deaths. We find, first, that the managerial labor market is characterized by positive sorting between managers’ contributions to value and their pay. We find, second, that executives appear, on average, to retain about 80% of the value they create. Overall, our results are informative about the workings of the managerial labor market.

Number of Pages in PDF File: 47

Keywords: Executive Compensation, Managerial Ability, Sudden Death, Corporate Governance, Value of Top Executive

JEL Classification: G3, G30

working papers series


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Date posted: March 16, 2010  

Suggested Citation

Nguyen, Bang Dang and Nielsen, Kasper Meisner, What Death can Tell: Are Executives Paid for Their Contributions to Firm Value? (March 16, 2010). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1572216 or http://dx.doi.org/10.2139/ssrn.1572216

Contact Information

Bang Dang Nguyen (Contact Author)
University of Cambridge - Judge Business School ( email )
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 122 376 0470 (Phone)
+44 1223 339701 (Fax)
HOME PAGE: http://www.jbs.cam.ac.uk/research/faculty/nguyenbd.html
Kasper Meisner Nielsen
Hong Kong University of Science & Technology - Department of Finance ( email )
Clear Water Bay, Kowloon
Hong Kong
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