Top Management Ties with Board Members: How They Affect Pay-Performance Sensitivity and IPO Performance

55 Pages Posted: 1 May 2014 Last revised: 2 May 2014

See all articles by Salim Chahine

Salim Chahine

American University of Beirut - Olayan School of Business

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Date Written: April 30, 2014

Abstract

This paper is the first study on the effects of pay-performance sensitivity (PPS) on the performance of initial public offerings (IPOs) in the presence of social ties and family ties of the top managers with board members. We find that both social ties and family ties increase PPS. In turn, PPS improves IPO performance. More importantly, greater PPS increases the positive effect of social ties on IPO performance whereas it reduces the negative effect of family ties.

Keywords: initial public offerings (IPOs), family ties, social ties, pay-performance sensitivity, homophily.

JEL Classification: G32, G34.

Suggested Citation

Chahine, Salim and Goergen, Marc, Top Management Ties with Board Members: How They Affect Pay-Performance Sensitivity and IPO Performance (April 30, 2014). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 419/2014. Available at SSRN: https://ssrn.com/abstract=2431219 or http://dx.doi.org/10.2139/ssrn.2431219

Salim Chahine

American University of Beirut - Olayan School of Business ( email )

Bliss Street
Beirut 1107 2020
Lebanon
961-1-374-374 (Phone)

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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