CEO investment of deferred compensation plans and firm performance

Domenico Rocco Cambrea, Stefano Colonnello, Giuliano Curatola, Giulia Fantini

Risultato della ricerca: Contributo in rivistaArticolo in rivistapeer review

1 Citazioni (Scopus)

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.
Lingua originaleEnglish
pagine (da-a)944-976
Numero di pagine33
RivistaJOURNAL OF BUSINESS FINANCE & ACCOUNTING
Volume46
DOI
Stato di pubblicazionePubblicato - 2019

Keywords

  • G32
  • G34
  • corporate distress
  • deferred compensation
  • executive compensation

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