Does Executive Compensation Reflect Corporate Productivity?
22 Pages Posted: 30 Sep 2020
Date Written: July-August 2020
Abstract
Recent literature has given attention to the effect of CEO‐specific productivity on the structure of CEO compensation. Our paper instead focuses on the effect of a different productivity factor—which we call “corporate productivity”—on CEO compensation. In particular, we show that corporate productivity affects the trade‐off between incentive and risk in a non‐monotonic fashion, which the literature has not yet recognized. Using various empirical proxies for corporate productivity, we show that our results are consistent with the non‐monotonic relation and thus contribute to the debates in the incentive‐risk trade‐off literature. Second, our findings also contribute to the internal capital market literature by exploring the relation between the structure of CEO compensation and excess value.
Keywords: CEO compensation, corporate productivity, excess value, incentive‐risk trade‐offs
JEL Classification: G30, G32, J33
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Does Executive Compensation Reflect Corporate Productivity?
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $42.00 .
File name: JBFA.pdf
Size: 0K
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
