The Impact of Clawback Adoption on Executive Cash Compensation Structure
Social Science Research Network(2019)
摘要
Prior research suggests an asymmetric relation between CEO cash compensation and firm performance as measured by market-adjusted stock returns. As discussed by Leone et al. (2006), the underlying rationale for this asymmetry is the difficulty in the ex post settling- up of cash compensation. We examine a later period (2007-2014) and find asymmetry between cash compensation (for CEOs and CFOs) and firm performance as measured by market-adjusted stock returns as well as accounting-based measures. Further, we find that clawback adoption is followed by reduced asymmetry in this relation, a finding consistent with clawback’s ex post settling-up characteristics. We contribute to the literature by showing that clawback adoption has had a favorable impact on the structure of CEO/CFO compensation consistent with Holmstrom (1979).
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