Journal article 1028 views 168 downloads
CEO investment of deferred compensation plans and firm performance
Domenico Rocco Cambrea,
Stefano Colonnello,
Giuliano Curatola,
Giulia Fantini 
Journal of Business Finance & Accounting, Volume: 46, Issue: 7-8, Pages: 944 - 976
Swansea University Author:
Giulia Fantini
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PDF | Accepted Manuscript
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DOI (Published version): 10.1111/jbfa.12382
Abstract
We study how US chief executive officers (CEOs) invest their deferred compensation plans depending on the firm’s profitability. By looking at the correlation between the CEO’s return on these plans and the firm’s stock return, we show that deferred compensation is to a large extent invested in the c...
| Published in: | Journal of Business Finance & Accounting |
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| ISSN: | 0306-686X 1468-5957 |
| Published: |
2019
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| Online Access: |
Check full text
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| URI: | https://cronfa.swan.ac.uk/Record/cronfa50269 |
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| Abstract: |
We study how US chief executive officers (CEOs) invest their deferred compensation plans depending on the firm’s profitability. By looking at the correlation between the CEO’s return on these plans and the firm’s stock return, we show that deferred compensation is to a large extent invested in the company equity in good times and divested from it in bad times. The divestment from company equity in bad times arguably reflects CEOs’ incentive to abandon the firm and to invest in alternative instruments to preserve the value of their deferred compensation plans. This result suggests that the incentive alignment effects of deferred compensation crucially depend on the firm’s health status. |
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| Keywords: |
Executive Compensation, Deferred Compensation, Corporate Distress |
| College: |
Faculty of Humanities and Social Sciences |
| Issue: |
7-8 |
| Start Page: |
944 |
| End Page: |
976 |