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CEO Compensation after Harvester Director Departure

Quarterly Journal of Finance, Forthcoming

40 Pages Posted: 27 Sep 2017 Last revised: 25 Oct 2018

See all articles by Victor Jarosiewicz

Victor Jarosiewicz

University of Florida

Date Written: October 1, 2017

Abstract

I examine the effects of board member departures on CEO compensation using a sample of high growth IPO firms. Agency theory predicts that a reduction in board monitoring by harvester directors (VCs and private equity investors) will result in an increase in CEO pay. I find that departures of the last harvester director on a board result in an immediate and lasting increase in CEO equity compensation, while prior departures by other harvester directors are not significant. The results hold even when controlling for other governance mechanisms such as CEO wealth, CEO turnover, board composition, and external blockholder ownership.

Keywords: Venture Capital, Corporate Governance, CEO Compensation

JEL Classification: M12, G34

Suggested Citation

Jarosiewicz, Victor, CEO Compensation after Harvester Director Departure (October 1, 2017). Quarterly Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3042780 or http://dx.doi.org/10.2139/ssrn.3042780

Victor Jarosiewicz (Contact Author)

University of Florida ( email )

FL
United States

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