Outside monitoring and CEO compensation in the banking industry

被引：88

作者：

John, Kose ^{[1
]}

Mehran, Hamid ^{[2
]}

Qian, Yiming ^{[3
]}

机构：

[1] NYU, Stern Sch Business, New York, NY 10012 USA

[2] Fed Reserve Bank New York, New York, NY 10045 USA

[3] Univ Iowa, Tippie Coll Business, Iowa City, IA 52245 USA

来源：

JOURNAL OF CORPORATE FINANCE | 2010年 / 16卷 / 04期

关键词：

Corporate governance; CEO compensation; Pay-for-performance sensitivity; Risk-shifting; Agency problems; Regulation; Subordinated debt; RISK; PERFORMANCE; MARKET;

D O I：

10.1016/j.jcorpfin.2010.01.001

中图分类号：

F8 [财政、金融];

学科分类号：

0202 ;

摘要：

We hypothesize that CEO compensation is optimally designed to trade off two types of agency problems: the standard shareholder-management agency problem as well as the risk-shifting problem between shareholders and debtholders. Analyses in this setup produces two predictions: (1) the pay-for-performance sensitivity of CEO compensation decreases with the leverage ratio: and (2) the pay-for-performance sensitivity of CEO compensation increases with the intensity of outside monitoring on the firm's risk choice. We test these two hypotheses for the banking industry where regulators and nondepository (subordinated) debtholders provide outside monitoring on the risk choice. We construct an index of the intensity of outside monitoring based on three variables: subordinated debt rating, non performing loan ratio and examination rating assigned by regulators. We find supporting evidence for both hypotheses. (C) 2010 Elsevier B.V. All rights reserved.

引用

页码：383 / 399

页数：17

共 33 条

[1] The other side of the trade-off: The impact of risk on executive compensation [J].