Abstract

http://ssrn.com/abstract=1711504
 
 

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How Much Do CEO Incentives Matter?


Robert Tumarkin


University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN)

July 11, 2010

23rd Australasian Finance and Banking Conference 2010 Paper

Abstract:     
The impact of CEO incentive compensation on firm performance is difficult to quantify because performance also affects incentives. To circumvent this problem, I form an estimate of the changes in CEO incentives caused by exogenous stock price movements using a return index for each firm’s peer group and lagged CEO holdings. For the mean incentive level, Tobin’s q increases by 10.0% compared to that of counterfactual firms that lack CEO incentive compensation. I also introduce an ex ante measure of the CEO’s discretion over her incentive portfolio and show that the greater this discretion the less incentives mitigate agency conflicts.

Number of Pages in PDF File: 45

JEL Classification: G3, G30

working papers series


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Date posted: November 19, 2010  

Suggested Citation

Tumarkin, Robert, How Much Do CEO Incentives Matter? (July 11, 2010). 23rd Australasian Finance and Banking Conference 2010 Paper. Available at SSRN: http://ssrn.com/abstract=1711504 or http://dx.doi.org/10.2139/ssrn.1711504

Contact Information

Robert Tumarkin (Contact Author)
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Sydney, NSW 2052
Australia
+61 02 9385 6730 (Phone)

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

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References:  41
Citations:  1

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