Open AccessEvidence from 1992 to 2019 on the dynamics of managerial authority and CEO remuneration during company crises
Author(s) -
Chin Tae Zan
Publication year - 2022
Publication title -
rechenschaftsberichte und verkaufsprospekt - deutsche gesellschaft für wertpapiersparen mbh
Language(s) - English
Resource type - Journals
ISSN - 0945-2753
DOI - 10.53384/inbe.101350943.2779.1862003510
Subject(s) - remuneration , corporate governance , business , accounting , incentive , compensation (psychology) , salary , shareholder , executive compensation , control (management) , enterprise value , value (mathematics) , matching (statistics) , perspective (graphical) , economics , finance , microeconomics , management , market economy , psychology , statistics , mathematics , machine learning , artificial intelligence , computer science , psychoanalysis
We investigate the dynamics of two governance constructs, management influence over the board of directors and CEO remuneration, in enterprises in crisis from 1992 to 2019. Data reveal a strong trend of improving governance over time, which confounds the conclusion concerning the impact of distress on governance. Using a bias-corrected matching estimator to control for secular trends, we find that distressed businesses cut management board appointments and CEO compensation, deepen managerial incentive alignment, and increase CEO turnover. The performance-related component of CEO remuneration accounts for the majority of changes in CEO compensation in troubled businesses, which is consistent with the "shareholder value" perspective on CEO compensation.