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HEADS I WIN, TAILS YOU LOSE: INSTITUTIONAL MONITORING OF EXECUTIVE PAY RIGIDITY

Title
HEADS I WIN, TAILS YOU LOSE: INSTITUTIONAL MONITORING OF EXECUTIVE PAY RIGIDITY
Authors
Choi, Paul Moon SubChung, Chune YoungHwang, Ji HoonLiu, Chang
Ewha Authors
최문섭
SCOPUS Author ID
최문섭scopus
Issue Date
2019
Journal Title
JOURNAL OF FINANCIAL RESEARCH
ISSN
0270-2592JCR Link

1475-6803JCR Link
Citation
JOURNAL OF FINANCIAL RESEARCH vol. 42, no. 4, pp. 789 - 816
Publisher
WILEY
Indexed
SSCI; SCOPUS WOS
Document Type
Article
Abstract
Agency theory argues that pay for performance alleviates the conflict of interest between managers and shareholders. Furthermore, the literature finds that institutional monitoring tends to promote the performance-pay linkage, thus aligning the two parties' incentives. We find that executive compensation rigidity is negatively and significantly associated with firm value. Moreover, ownership by long-term institutional investors reduces the pay rigidity of top managers in underperforming firms, thus decreasing the value-destroying effect of the rigidity. Overall, these results reaffirm the role of institutional monitoring in mitigating managerial rent extraction.
DOI
10.1111/jfir.12196
Appears in Collections:
경영대학 > 경영학전공 > Journal papers
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