Search Results
Working Paper
Does tax policy affect executive compensation? evidence from postwar tax reforms
Evidence since the 1980s suggests that the level and structure of executive compensation in U.S. public corporations are largely unresponsive to tax incentives. However, the relative tax advantage of different forms of pay has been relatively small during this period. Using a sample of top executives in large firms from 1946 to 2005, we find little response of salaries, qualified stock options, long-term incentive pay, or bonuses paid after retirement to changes in tax rates on labor income--even though tax rates were significantly higher and more heterogeneous across individuals in the first ...
Journal Article
Policy update: Are CEOs paid too much?
Related link(s): https://www.richmondfed.org/-/media/richmondfedorg/publications/research/econ_focus/2009/spring/policy_update_weblinks.cfm
Journal Article
Opinion : Too big to fail and the distortion of compensation incentives
Designing compensation schemes is complicated, because of the difficulties in measuring performance and tying it to the actions of employees.
Working Paper
Executive compensation: a calibration approach
A study that uses principal-agent theory to produce quantitative predictions about executive compensation, showing that observed incentives closely match optimal predicted incentives.
Journal Article
Firms, assignments, and earnings
Working Paper
Executive compensation and earnings management under moral hazard
This paper analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. We examine how the opportunity to manipulate affects the optimal pay contract, and establish necessary and sufficient conditions under which earnings management occurs. Our model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and ...
Report
Executive compensation and risk taking
This paper studies the connection between risk taking and executive compensation in financial institutions. A theoretical model of shareholders, debtholders, depositors, and an executive suggests that 1) in principle, excessive risk taking (in the form of risk shifting) may be addressed by basing compensation on both stock price and the price of debt (proxied by the credit default swap spread), but 2) shareholders may be unable to commit to designing compensation contracts in this way and indeed may not want to because of distortions introduced by either deposit insurance or naive ...
Report
Corporate governance and banks: what have we learned from the financial crisis?
Recent academic work and policy analysis give insight into the governance problems exposed by the financial crisis and suggest possible solutions. We begin this paper by explaining why governance of banks differs from governance of nonfinancial firms. We then look at four areas of governance: executive compensation, boards, risk management, and market discipline. We discuss promising solutions and areas where further research is needed.
Report
Deferred compensation, risk, and company value: investor reactions to CEO incentives
Many 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. ...