Financial Distress Risk and New CEO Compensation

Published Online:https://doi.org/10.1287/mnsc.2014.2146

References

  • Abowd JM, Ashenfelter O (1981) Anticipated unemployment, temporary layoffs, and compensating wage differentials. Rosen S, ed. Studies in Labor Markets (University of Chicago Press, Chicago), 141–186.Google Scholar
  • Acharya V, Pagano M, Volpin P (2012) Seeking alpha: Excess risk taking and competition for managerial talent. Working paper, New York University, New York.Google Scholar
  • Aggarwal RK, Samwick AA (1999) The other side of the tradeoff: The impact of risk on executive compensation. J. Political Econom. 108:65–105.CrossrefGoogle Scholar
  • Agrawal A, Knoeber CR (1998) Managerial compensation and the threat of takeover. J. Financial Econom. 47:219–239.CrossrefGoogle Scholar
  • Barth ME, Beaver WH, Landsman WR (1998) Relative valuation roles of equity book value and net income as a function of financial health. J. Accounting Econom. 25:1–34.CrossrefGoogle Scholar
  • Bates T, Wu QQ (2011) Are good managers hired? Post-acquisition employment opportunities for target CEOs. Working paper, Arizona State University, Tempe.Google Scholar
  • Berk JB, Stanton R, Zechner J (2010) Human capital, bankruptcy, and capital structure. J. Finance 65:891–926.CrossrefGoogle Scholar
  • Berkovitch E, Israel R, Spiegel Y (2000) Managerial compensation and capital structure. J. Econom. Management Strategy 9:549–584.CrossrefGoogle Scholar
  • Bertrand M, Mullainathan S (2000) Agents with and without principles. Amer. Econom. Rev. 90:203–208.CrossrefGoogle Scholar
  • Cannella AA Jr, Fraser DR, Lee DS (1995) Firm failure and managerial labor markets: Evidence from Texas banking. J. Financial Econom. 38:185–210.CrossrefGoogle Scholar
  • Chang YY, Dasgupta S, Hilary G (2010) CEO ability, pay and firm performance. Management Sci. 56:1633–1652.LinkGoogle Scholar
  • Chemmanur TJ, Cheng Y, Zhang T (2013) Capital structure and employee pay: An empirical analysis. J. Financial Econom. 110:478–502.CrossrefGoogle Scholar
  • Clark TA, Weinstein MI (1983) The behavior of the common stock of bankrupt firms. J. Finance 38:489–504.CrossrefGoogle Scholar
  • Core J, Guay W (2002) Estimating the value of employee stock option portfolios and their sensitivities to price and volatility. J. Accounting Res. 40:613–630.CrossrefGoogle Scholar
  • Core JE, Holthausen RW, Larcker DF (1999) Corporate governance, chief executive officer compensation, and firm performance. J. Financial Econom. 51:371–406.CrossrefGoogle Scholar
  • Custodio C, Ferreira MA, Matos P (2013) Generalists versus specialists: Managerial skills and CEO pay. J. Financial Econom. 108:471–492.CrossrefGoogle Scholar
  • Da Z, Gao P (2010) Clientele change, liquidity shock, and the return on financially distressed stocks. J. Financial Quant. Anal. 45:27–48.CrossrefGoogle Scholar
  • Demerjian P, Lev B, McVay S (2012) Quantifying managerial ability: A new measure and validity tests. Management Sci. 58:1229–1248.LinkGoogle Scholar
  • Denis DJ, Denis DK (1995) Causes of financial distress following leveraged recapitalizations. J. Financial Econom. 37:129–157.CrossrefGoogle Scholar
  • Eavis P (2002) Detox: Curtain ready to fall on Conseco. TheStreet (August 9), http://www.thestreet.com/story/10036804/1/detox-curtain-ready-to-fall-on-conseco.html.Google Scholar
  • Espen EB, Thorburn KS (2003) Control benefits and CEO discipline in automatic bankruptcy auctions. J. Financial Econom. 69:227–258.CrossrefGoogle Scholar
  • Fama E (1980) Agency problems and the theory of the firm. J. Political Econom. 88:288–307.CrossrefGoogle Scholar
  • Farrell K, Whidbee D (2003) Impact of firm performance expectations on CEO turnover and replacement decisions. J. Accounting Econom. 36:165–196.CrossrefGoogle Scholar
  • Fee CE, Hadlock CJ (2003) Raids, rewards, and reputations in the market for managerial talent. Rev. Financial Stud. 16:1315–1357.CrossrefGoogle Scholar
  • Fee CE, Hadlock CJ (2004) Management turnover across the corporate hierarchy. J. Accounting Econom. 37:3–38.CrossrefGoogle Scholar
  • Garen JE (1994) Executive compensation and principal-agent theory. J. Political Econom. 102:1175–1199.CrossrefGoogle Scholar
  • Gilson SC (1989) Management turnover and financial distress. J. Financial Econom. 25:241–262.CrossrefGoogle Scholar
  • Gilson SC, Vetsuypens MR (1993) CEO compensation in financially distressed firms: An empirical analysis. J. Finance 48:425–458.CrossrefGoogle Scholar
  • Graham JR, Harvey CR, Puri M (2013) Managerial attitudes and corporate actions. J. Financial Econom. 109:103–121.CrossrefGoogle Scholar
  • Graham JR, Li S, Qiu J (2012) Managerial attributes and executive compensation. Rev. Financial Stud. 25:144–186.CrossrefGoogle Scholar
  • Grossman S, Hart O (1982) Corporate financial structure and managerial incentives. McCall J, ed. The Economics of Information and Uncertainty (University of Chicago Press, Chicago), 107–140.Google Scholar
  • Hamermesh DS, Wolfe JR (1990) Compensating wage differentials and the duration of wage loss. J. Labor Econom. 8:S175–S197.CrossrefGoogle Scholar
  • Hillegeist SA, Keating E, Cram D, Lundstedt K (2004) Assessing the probability of bankruptcy. Rev. Accounting Stud. 9:5–34.CrossrefGoogle Scholar
  • Holmstrom B (1979) Moral Hazard and observability. Bell J. Econom. 10:74–91.CrossrefGoogle Scholar
  • Huson MR, Malatesta PH, Parrino R (2004) Managerial succession and firm performance. J. Financial Econom. 74:237–275.CrossrefGoogle Scholar
  • Ittner CD, Lambert RA, Larcker DF (2003) The structure and performance consequences of equity grants to employees of new economy firms. J. Accounting Econom. 34:89–127.CrossrefGoogle Scholar
  • Jaggia PB, Thakor AV (1994) Firm-specific human capital and optimal capital structure. Internat. Econom. Rev. 35:283–308.CrossrefGoogle Scholar
  • Jensen MC (1986) The agency costs of free cash flow. Amer. Econom. Rev. 76:323–329.Google Scholar
  • Jensen MC, Meckling WH (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure. J. Financial Econom. 3:305–360.CrossrefGoogle Scholar
  • Jenter D, Kanaan F (2015) CEO turnover and relative performance evaluation. J. Finance 70:2155–2184.CrossrefGoogle Scholar
  • Jin L (2002) CEO compensation, diversification, and incentives. J. Financial Econom. 66:29–63.CrossrefGoogle Scholar
  • Kaplan SN, Minton BA (2012) How has CEO turnover changed? Internat. Rev. Finance 12:57–87.CrossrefGoogle Scholar
  • Khanna N, Poulsen A (1995) Managers of financially distressed firms: Villains or scapegoats? J. Finance 50:919–940.CrossrefGoogle Scholar
  • Khurana R (2002) Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs (Princeton University Press, Princeton, NJ).CrossrefGoogle Scholar
  • Khurana R, Piskorski MJ (2004) Sources of structural inequality in managerial labor markets. Res. Soc. Stratification and Mobility 21:167–185.CrossrefGoogle Scholar
  • Kim S (2013) What is behind the magic of O-score? An alternative interpretation of Dichev’s (1998) bankruptcy risk anomaly. Rev. Accounting Stud. 18:291–323.CrossrefGoogle Scholar
  • Kuhnen CM (2015) Asymmetric learning from financial information. J. Finance 70:2029–2062.CrossrefGoogle Scholar
  • Lang LH, Stulz RM (1992) Contagion and competitive intra-industry effects of bankruptcy announcements. J. Financial Econom. 32:45–60.CrossrefGoogle Scholar
  • Milbourn TT (2003) CEO reputation and stock-based compensation. J. Financial Econom. 68:233–262.CrossrefGoogle Scholar
  • Norris F, Treaster JB (2002) Conseco recovery efforts fail; a bankruptcy filing is possible. New York Times (August 10), http://www.nytimes.com/2002/08/10/business/conseco-recovery-efforts-fail-a-bankruptcy-filing-is-possible.html.Google Scholar
  • Ohlson J (1980) Financial ratios and the probabilistic prediction of bankruptcy. J. Accounting Res. 18:109–131.CrossrefGoogle Scholar
  • Parrino R (1997) CEO turnover and outside succession: A cross sectional analysis. J. Financial Econom. 46:165–197.CrossrefGoogle Scholar
  • Peters F, Wagner A (2014) The executive turnover risk premium. J. Finance 69:1529–1563.CrossrefGoogle Scholar
  • Prendergast C (2002) The tenuous trade-off between risk and incentives. J. Political Econom. 110:1071–1102.CrossrefGoogle Scholar
  • Rajgopal S, Shevlin T, Zamora V (2006) CEOs' outside employment opportunities and the lack of relative performance evaluation in compensation contracts. J. Finance 61:1813–1844.CrossrefGoogle Scholar
  • Rose DC (1992) Bankruptcy risk, firm-specific managerial human capital, and diversification. Rev. Indust. Organ. 7:65–73.CrossrefGoogle Scholar
  • Schwartz KB, Menon K (1985) Executive succession in failing firms. Acad. Management J. 28:680–686.CrossrefGoogle Scholar
  • Semadeni M, Cannella AA Jr, Fraser DR, Lee DS (2008) Fight or flight: Managing stigma in executive careers. Strategic Management J. 29:557–567.CrossrefGoogle Scholar
  • Siegel J, Pyun LB, Cheon Y (2014) Multinational firms, labor market discrimination, and the capture of competitive advantage by exploiting the social divide. Working paper, Harvard Business School, Boston.Google Scholar
  • Smith CW, Watts RL (1992) The investment opportunity set and corporate financing, dividend, and compensation policies. J. Financial Econom. 32:263–292.CrossrefGoogle Scholar
  • Weisbach MS (1988) Outside directors and CEO turnover. J. Financial Econom. 20:431–460.CrossrefGoogle Scholar
  • White H (1980) A heterosckedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48:817–838.CrossrefGoogle Scholar
  • Zajac EJ (1990) CEO selection, succession, compensation and firm performance: A theoretical integration and empirical analysis. Strategic Management J. 11:217–230.CrossrefGoogle Scholar
  • Zwiebel J (1995) Corporate conservatism and relative compensation. J. Political Econom. 103:1–25.CrossrefGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.