Author: Francisco CovasPublisher:
ISBN:
Category : Decision making
Languages : en
Pages : 268
Book Description
Managerial Incentives, Corporate Investment, and Economic Preference
Author: Francisco CovasPublisher:
ISBN:
Category : Decision making
Languages : en
Pages : 268
Book Description
Managerial Incentives, Corporate Investment, and Economic Performance
Author: Francisco CovasManagerial Incentives and Investment Policy in Family Firms
Author: Mieszko MazurPublisher:
ISBN:
Category :
Languages : en
Pages : 40
Book Description
This paper provides evidence that CEO incentive pay mediates the effect of family preferences on corporate investment policy. Our study focuses on the option portfolio volatility sensitivity vega, which motivates the risk-taking behavior of undiversified managers. After controlling for factors that affect incentive pay and investment policy simultaneously, we find that one-third of underinvestment in riskier R&D projects in active family firms can be attributed to a significantly lower vega. Passive family firms allocate more capital to R&D as opposed to active family firms, and are more active in M&A deal making. In contrast to many prior studies, pay incentives and families are not associated with capital expenditures. Overall, our empirical results suggest that CEO pay incentives induce investment policy contingent on firm risk. Family CEO incentive pay manifests the family preference for lower risk, especially in firms with higher firm risk. Nonetheless, after replacing family CEOs with outside professionals, investments in both R&D and M&A increase, which is consistent with the family preference for extended investment horizons. Interestingly, such a preference seems not to be manifested in incentive pay.
Managerial Incentives and Corporate Investment Decisions
Author: James Ah ChipPublisher:
ISBN:
Category : Corporations
Languages : en
Pages : 160
Book Description
Information Aggregation, Investment, and Managerial Incentives
Author: Elias AlbagliAgency Problems and Financial Contracting
Author: Amir BarneaPublisher: Prentice Hall
ISBN:
Category : Business & Economics
Languages : en
Pages : 184
Book Description
Symposium on Managerial Incentives and Corporate Performance: Effects of Executive Compensation, Organzational Structure, Takeovers, and Government Policy
Author: Ray BallCorporate Investments, Managerial Incentives and Theory of the Firm
Author: Anup AgramalPublisher:
ISBN:
Category : Corporations
Languages : en
Pages : 50
Book Description
Institutional Investment, Corporate Earnings and Managerial Incentives
Author: Mark LangPublisher:
ISBN:
Category : Corporate profits
Languages : en
Pages : 28
Book Description
Investment, Dividends, Firm Performance and Managerial Incentives
Author: Mahmoud AghaPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
We combine the incentive schemes offered to managers in practice into a single incentive package and construct a governance index to analyze the role of governance and the incentive package in addressing the agency costs of free cash flow. Using US based data, we find empirical evidence that managers in practice do not consume perks but make a tradeoff when they allocate the cash flows of the firm between investment and dividends. In general, managers in practice underinvest and overpay dividends; an increase in their incentive package would retract both investment and dividends toward the optimal levels; hence, firm performance would improve. We also find that governance is used as a control mechanism rather than as a substitute for the incentive package. Principals employ governance to slow down investment and increase dividends when there is a high informational asymmetry between the manager and the investors, and set these variables close to the optimal levels otherwise. Moreover, we find that firms in practice do not use dividends as a substitute for governance. Furthermore, we find monotone relations between investment, firm performance and dividends on the one hand, and governance and the incentive package on the other hand.