Titelaufnahme

Titel
Executive compensation, macroeconomic conditions, and cash flow cyclicality / Stefano Colonnello
VerfasserColonnello, Stefano
ErschienenHalle (Saale), Germany : Halle Institute for Economic Research (IWH), March 2016
Umfang1 Online-Ressource (52 Seiten = 0,99 MB) : Illustrationen
SpracheEnglisch
SerieIWH-Diskussionspapiere ; no. 6/2016
URNurn:nbn:de:gbv:3:2-53336 
Zugriffsbeschränkung
 Das Dokument ist frei verfügbar
Dateien
Executive compensation, macroeconomic conditions, and cash flow cyclicality [0.99 mb]
Links
Nachweis
Klassifikation
Keywords
I model the joint effects of debt macroeconomic conditions and cash flow cyclicality on risk-shifting behavior and managerial pay-for-performance sensitivity. I show that risk-shifting incentives rise during recessions and that the shareholders can eliminate such adverse incentives by reducing the equity-based compensation in managerial contracts. I also show that this reduction should be larger in highly procyclical firms. Using a sample of U.S. public firms I provide evidence supportive of the model’s predictions. First I find that equity-based incentives are reduced during recessions. Second I show that the magnitude of this effect is increasing in a firm’s cash flow cyclicality.