Journal article
CEO deal-making activities and compensation
Journal of financial economics, v 114(3), pp 471-492
Dec 2014
Abstract
Using transactions generally overlooked in the compensation literature—joint ventures, strategic alliances, seasoned equity offerings (SEOs), and spin-offs—we find that, beyond compensation for increases in firm size or complexity, chief executive officers (CEOs) are rewarded for their deal-making activities. Boards pay CEOs for the core motivation of the deal, as well as for deal volume. We find that compensating for volume instead of core value creation occurs under weak board monitoring and that in deal-making firms, neither CEO turnover nor pay-for-performance responds to underperformance. We introduce an input monitoring explanation for these results: boards compensate for deal volume because of their inability to perfectly monitor outputs.
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Details
- Title
- CEO deal-making activities and compensation
- Creators
- Eliezer M. Fich - Drexel UniversityLaura T. Starks - The University of Texas at AustinAdam S. Yore - Northern Illinois University
- Publication Details
- Journal of financial economics, v 114(3), pp 471-492
- Publisher
- Elsevier
- Grant note
- Center for Research Excellence
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Finance
- Web of Science ID
- WOS:000347656900004
- Scopus ID
- 2-s2.0-85027931762
- Other Identifier
- 991019168379704721
InCites Highlights
Data related to this publication, from InCites Benchmarking & Analytics tool:
- Collaboration types
- Domestic collaboration
- Web of Science research areas
- Business, Finance
- Economics