Abstract

http://ssrn.com/abstract=687152
 
 

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Citations (33)



 


 



Explicit vs. Implicit Contracts: Evidence from CEO Employment Agreements


Stuart Gillan


University of Georgia - Department of Finance

Jay C. Hartzell


University of Texas at Austin - Department of Finance

Robert Parrino


University of Texas at Austin - Department of Finance

July 4, 2008

AFA 2006 Boston Meetings

Abstract:     
We report evidence on the determinants of whether the relationship between a firm and its Chief Executive Officer (CEO) is governed by an explicit (written) or an implicit agreement. We find that fewer than half of the CEOs of S&P 500 firms have comprehensive explicit employment agreements. Consistent with contracting theory, explicit agreements are more likely to be observed, and are likely to have a longer duration, where the sustainability of the relationship is less certain and where the expected loss to the CEO is greater if the firm fails to honor the agreement.

Number of Pages in PDF File: 40

Keywords: Contracting, CEOs, corporate governance

JEL Classification: G30, G34

working papers series


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Date posted: June 3, 2005 ; Last revised: July 26, 2008

Suggested Citation

Gillan, Stuart and Hartzell, Jay C. and Parrino, Robert, Explicit vs. Implicit Contracts: Evidence from CEO Employment Agreements (July 4, 2008). AFA 2006 Boston Meetings . Available at SSRN: http://ssrn.com/abstract=687152 or http://dx.doi.org/10.2139/ssrn.687152

Contact Information

Stuart L. Gillan
University of Georgia - Department of Finance ( email )
Terry College of Business
Athens, GA 30602-6253
United States
Jay C. Hartzell
University of Texas at Austin - Department of Finance ( email )
1 University Station B6600
Austin, TX 78712
United States
512-471-6779 (Phone)
512-471-5073 (Fax)
HOME PAGE: http://www.mccombs.utexas.edu/faculty/jay.hartzell/
Robert Parrino (Contact Author)
University of Texas at Austin - Department of Finance ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-471-5788 (Phone)
512-471-5073 (Fax)
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