Strategic Mimicry in Corporate Repurchases: The Dynamics of CEO Peer Benchmarking

2022 Asian Finance Association Conference, 2022 FMA(US) conference, 2023 Midwest Finance Association annual meeting

55 Pages Posted: 22 Sep 2022 Last revised: 12 Sep 2023

See all articles by Yuyuan Chang

Yuyuan Chang

South China University of Technology

David M. Reeb

National University of Singapore - Dept of Accounting

Yao Shen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Jing Xie

University of Macau, Faculty of Business Administration, Department of Finance and Business Economics

Date Written: March 1, 2021

Abstract

This study investigates the relationship between CEO compensation and corporate decision-making, focusing on share repurchases over the past two decades. We examine how CEO-level pairings influence firms to emulate their Compensation Peers (CPs) in share repurchases. The results reveal a significant effect of the repurchases of CP firms on the actions of the focal firm, with a stronger influence from prominent or larger CPs or those in a two-way CP relationship. Our paper links CP herding and share repurchases, and documents that CP firms’ share repurchases can negatively affect CEO pay of the focal firms. These findings offer insights into the dynamics and broader implications of pay benchmarking.

Keywords: CEO compensation; Compensation benchmarking; Share repurchases; Peer effects

JEL Classification: G35, M12

Suggested Citation

Chang, Yuyuan and Reeb, David M. and Shen, Yao and Xie, Jing, Strategic Mimicry in Corporate Repurchases: The Dynamics of CEO Peer Benchmarking (March 1, 2021). 2022 Asian Finance Association Conference, 2022 FMA(US) conference, 2023 Midwest Finance Association annual meeting , Available at SSRN: https://ssrn.com/abstract=4199950 or http://dx.doi.org/10.2139/ssrn.4199950

Yuyuan Chang

South China University of Technology ( email )

David M. Reeb

National University of Singapore - Dept of Accounting ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://www.davidreeb.net

Yao Shen

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

55 Lexington Ave
New York, NY 10010
United States

Jing Xie (Contact Author)

University of Macau, Faculty of Business Administration, Department of Finance and Business Economics ( email )

E22-4064, FBA building
Macau
Macau, 000000
China
+853 88224639 (Phone)

HOME PAGE: http://fba.um.edu.mo/faculty/jingxie/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
78
Abstract Views
430
Rank
571,287
PlumX Metrics