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dc.contributor.authorKang, Qiangen_US
dc.contributor.authorMitnik, Oscar A.en_US
dc.date.accessioned2008-12-02en_US
dc.date.accessioned2010-07-07T11:52:27Z-
dc.date.available2010-07-07T11:52:27Z-
dc.date.issued2008en_US
dc.identifier.piurn:nbn:de:101:1-20081202165en_US
dc.identifier.urihttp://hdl.handle.net/10419/35487-
dc.description.abstractThere is a debate on whether executive pay reflects rent extraction due to managerial power or is the result of arms-length bargaining in a principal-agent framework. In this paper we offer a test of the managerial power hypothesis by empirically examining the CEO compensation of U.S. public companies that were ever in financial distress between 1992 and 2005. Using a bias-corrected matching estimator that estimates the causal effects of financial distress, we find that, for the distressed firms, CEO turnover rates increase markedly and their CEOs, both incumbents and successors, experience significant reductions in total compensation. The bulk of the reduction in total compensation derives from the decline in value of stock option grants, which we argue is due to a change in the opportunistic timing of option grants. We define lucky grants as those with grant prices below or at the lowest stock price of the grant month, and we find that the proportion of lucky grants for financially distressed firms is higher before insolvency and lower upon and after insolvency, while the proportion for similar but solvent firms remains stable throughout the period. We interpret this evidence as consistent with a decrease in managerial power induced by a tightening in the outrage constraint due to the episode of financial distress.en_US
dc.language.isoengen_US
dc.publisherIZA Bonnen_US
dc.relation.ispartofseriesIZA discussion papers 3857en_US
dc.subject.jelG30en_US
dc.subject.ddc330en_US
dc.subject.keywordCEO compensationen_US
dc.subject.keywordCEO turnoveren_US
dc.subject.keywordfinancial distressen_US
dc.subject.keywordlucky grantsen_US
dc.subject.keywordbias-corrected matching estimatorsen_US
dc.subject.stwFührungskräfteen_US
dc.subject.stwGehalten_US
dc.subject.stwAktienoptionsplanen_US
dc.subject.stwKrisenmanagementen_US
dc.subject.stwArbeitsmobilitäten_US
dc.subject.stwVerhandlungsmachten_US
dc.subject.stwSchätzungen_US
dc.subject.stwAktiengesellschaften_US
dc.subject.stwUSAen_US
dc.titleNot so lucky any more: CEO compensation in financially distressed firmsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn586161201en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
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