Abstract

https://ssrn.com/abstract=1572085
 
 

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Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance


Michael J. Cooper


University of Utah - David Eccles School of Business

Huseyin Gulen


Purdue University - Krannert School of Management

P. Raghavendra Rau


University of Cambridge

November 1, 2016


Abstract:     
Measures of Chief Executive Officer (CEO) excess compensation are negatively related to future firm returns and operating performance. The effect is stronger for more overconfident CEOs at firms with weaker corporate governance. Overconfident CEOs receiving high excess pay undertake activities such as overinvestment and value-destroying mergers and acquisitions that lead to shareholder wealth losses.

Number of Pages in PDF File: 52

Keywords: Executive compensation, Pay-performance relationship

JEL Classification: G34, J33


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Date posted: March 19, 2010 ; Last revised: December 2, 2016

Suggested Citation

Cooper, Michael J. and Gulen, Huseyin and Rau, P. Raghavendra, Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance (November 1, 2016). Available at SSRN: https://ssrn.com/abstract=1572085 or http://dx.doi.org/10.2139/ssrn.1572085

Contact Information

Michael J. Cooper
University of Utah - David Eccles School of Business ( email )
1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
Huseyin Gulen
Purdue University - Krannert School of Management ( email )
1310 Krannert Building
West Lafayette, IN 47907-1310
United States
P. Raghavendra Rau (Contact Author)
University of Cambridge ( email )
Cambridge Judge Business School
Trumpington Street
Cambridge, Cambridgeshire CB21AG
United Kingdom
3103626793 (Phone)
HOME PAGE: http://www.raghurau.com/
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