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dc.contributor.authorKang, Qiangen
dc.contributor.authorMitnik, Oscar A.en
dc.date.accessioned2008-12-02-
dc.date.accessioned2010-07-07T11:52:27Z-
dc.date.available2010-07-07T11:52:27Z-
dc.date.issued2008-
dc.identifier.piurn:nbn:de:101:1-20081202165en
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
dc.language.isoengen
dc.publisher|aInstitute for the Study of Labor (IZA) |cBonnen
dc.relation.ispartofseries|aIZA Discussion Papers |x3857en
dc.subject.jelG30en
dc.subject.ddc330en
dc.subject.keywordCEO compensationen
dc.subject.keywordCEO turnoveren
dc.subject.keywordfinancial distressen
dc.subject.keywordlucky grantsen
dc.subject.keywordbias-corrected matching estimatorsen
dc.subject.stwFührungskräfteen
dc.subject.stwGehalten
dc.subject.stwAktienoptionsplanen
dc.subject.stwKrisenmanagementen
dc.subject.stwArbeitsmobilitäten
dc.subject.stwVerhandlungsmachten
dc.subject.stwSchätzungen
dc.subject.stwAktiengesellschaften
dc.subject.stwUSAen
dc.titleNot so lucky any more: CEO compensation in financially distressed firms-
dc.type|aWorking Paperen
dc.identifier.ppn586161201en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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