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dc.contributor.authorWei, Chenyangen_US
dc.contributor.authorYermack, Daviden_US
dc.date.accessioned2012-08-17T14:32:44Z-
dc.date.available2012-08-17T14:32:44Z-
dc.date.issued2010en_US
dc.identifier.urihttp://hdl.handle.net/10419/60756-
dc.description.abstractMany commentators have suggested that companies pay top executives with deferred compensation, a type of incentive known as inside debt. Recent SEC disclosure reforms greatly increased the transparency of deferred compensation. We investigate stockholder and bondholder reactions to companies' initial reports of their CEOs' inside debt positions in early 2007, when new disclosure rules took effect. We find that bond prices rise, equity prices fall, and the volatility of both securities drops upon disclosures by firms whose CEOs have sizable defined benefit pensions or deferred compensation. Similar changes in value occur for credit default swap spreads and exchange-traded options. The results indicate a reduction in firm risk, a transfer of value from equity toward debt, and an overall destruction of enterprise value when a CEO's deferred compensation holdings are large.en_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of New York New York, NYen_US
dc.relation.ispartofseriesStaff Report, Federal Reserve Bank of New York 445en_US
dc.subject.jelG14en_US
dc.subject.jelG32en_US
dc.subject.ddc330en_US
dc.subject.keywordDeferred compensationen_US
dc.subject.keywordinside debten_US
dc.subject.keywordexecutive compensation disclosureen_US
dc.titleDeferred compensation, risk, and company value: Investor reactions to CEO incentivesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn635888815en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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