Essays in empirical corporate finance: CEO compensation, social interactions, and M&A
نویسنده
چکیده
This thesis consists of three essays and studies CEO compensation and mergers and acquisitions in empirical corporate finance. The first essay is sole-authored and is titled ‘The Effect of Social Interactions on Executive Compensation.’ The second essay ‘The Role of Investment Banker Directors in M&A: Can Experts Help?’ is a joint work with Qianqian Huang, Erik Lie, and Ke Yang. The third essay is titled ‘The Strategic Use of CEO Compensation in Labor Contract Negotiations’ and is coauthored with Erik Lie and Tingting Que. In the first essay, I examine how executives’ social interactions affect their compensation. Using the social networks among 2,936 chief executive officers (CEOs) during 1999–2008, I report that the compensation of a pair of socially connected CEOs is significantly more similar than that of a pair of non-connected CEOs. I further find that CEO compensation responds to a peer‘s change in pay caused by industry performance, especially if that change in pay is positive rather than negative and when the firm is suffering from weak corporate governance. I interpret these results as consistent with the notion that relative earnings concerns within social networks affect negotiations about compensation. Finally, I find that the past practice of backdating stock option grants spread across social networks, suggesting that social networks serve as a conduit for interpersonal information flow about compensation practices. Taken together, I show that CEOs’ peer interactions have a substantial impact on executive pay. In the second essay, we examine how directors with investment banking experience affect firms’ acquisition behavior. We find that firms have a higher probability of acquisition when an investment banker is a director. Furthermore, acquirers
منابع مشابه
Essays in empirical corporate finance: asset sales and takeovers, CEO compensation, and investment under uncertainty
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