Abstract

http://ssrn.com/abstract=838245
 
 

References (39)



 
 

Citations (20)



 


 



Firm Expansion and CEO Pay


Lucian A. Bebchuk


Harvard Law School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)

Yaniv Grinstein


Cornell University - Samuel Curtis Johnson Graduate School of Management


Harvard Law and Economics Discussion Paper No. 533, 2005
Johnson School Research Paper No. 27-06

Abstract:     
We study the extent to which decisions to expand firm size are associated with increases in subsequent CEO compensation. Investigating a broad universe of firm-expansion choices, we find, controlling for performance and firm characteristics, a positive and economically meaningful correlation between CEO compensation and the CEO's past decisions to increase firm size. We demonstrate that the identified correlation is not driven by large corporate acquisitions, and that it remains significant and economically meaningful when firms making large acquisitions during the relevant period are excluded. We further find an asymmetry between size increases and decreases: while size increases are positively correlated with subsequent CEO pay, size decreases are not negatively correlated with subsequent CEO pay. The identified association between expansion decisions and subsequent CEO pay is relevant for assessing CEO incentives with respect to a broad range of choices made by firms.

Number of Pages in PDF File: 39

Keywords: executive compensation, firm size, acquisitions, distributions, repurchases, stock issuance, empire-building, sales growth, pay for performance, options

JEL Classification: D23, G32, G38, J33, J44, K22, M14

working papers series


Download This Paper

Date posted: November 7, 2005 ; Last revised: May 10, 2009

Suggested Citation

Bebchuk, Lucian A. and Grinstein, Yaniv, Firm Expansion and CEO Pay. Harvard Law and Economics Discussion Paper No. 533, 2005; Johnson School Research Paper No. 27-06. Available at SSRN: http://ssrn.com/abstract=838245 or http://dx.doi.org/10.2139/ssrn.838245

Contact Information

Lucian A. Bebchuk (Contact Author)
Harvard Law School ( email )
Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)
HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR) and European Corporate Governance Institute (ECGI)
Yaniv Grinstein
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Sage Hall
Ithaca, NY 14853
United States
607-255-8686 (Phone)
607-254-4590 (Fax)

Feedback to SSRN


Paper statistics
Abstract Views: 9,345
Downloads: 1,754
Download Rank: 4,262
References:  39
Citations:  20
People who downloaded this paper also downloaded:
1. CEO Centrality
By Martijn Cremers, Lucian Bebchuk, ...

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.297 seconds