CEO Investment of Deferred Compensation Plans and Firm Performance
Journal of Business Finance & Accounting,
We study how US chief executive officers (CEOs) invest their deferred compensation plans depending on the firm's profitability. By looking at the correlation between the CEO's return on these plans and the firm's stock return, we show that deferred compensation is to a large extent invested in the company equity in good times and divested from it in bad times. The divestment from company equity in bad times arguably reflects CEOs' incentive to abandon the firm and to invest in alternative instruments to preserve the value of their deferred compensation plans. This result suggests that the incentive alignment effects of deferred compensation crucially depend on the firm's health status.
Badly Hurt? Natural Disasters and Direct Firm Effects
Finance Research Letters,
We investigate firm outcomes after a major flood in Germany in 2013. We robustly find that firms located in the disaster regions have significantly higher turnover, lower leverage, and higher cash in the period after 2013. We provide evidence that the effects stem from firms that already experienced a similar major disaster in 2002. Overall, our results document a positive net effect on firm performance in the direct aftermath of a natural disaster.
Wirtschaft unter Schock – Finanzpolitik hält dagegen Frühjahrsgutachten der Wirtschaftsforschungsinstitute: Die...
Evidenzbasierte Politikberatung (IWH-CEP)
Zentrum für evidenzbasierte Politikberatung (IWH-CEP) ...
IWH-FDI-Mikrodatenbank Die IWH-FDI-Mikrodatenbank (FDI = Foreign Direct Investment)...
Benign Neglect of Covenant Violations: Blissful Banking or Ignorant Monitoring?
IWH Discussion Papers,
Theoretically, bank‘s loan monitoring activity hinges critically on its capitalisation. To proxy for monitoring intensity, we use changes in borrowers‘ investment following loan covenant violations, when creditors can intervene in the governance of the firm. Exploiting granular bank-firm relationships observed in the syndicated loan market, we document substantial heterogeneity in monitoring across banks and through time. Better capitalised banks are more lenient monitors that intervene less with covenant violators. Importantly, this hands-off approach is associated with improved borrowers‘ performance. Beyond enhancing financial resilience, regulation that requires banks to hold more capital may thus also mitigate the tightening of credit terms when firms experience shocks.
The CompNet Competitiveness Database The Competitiveness Research Network (CompNet)...
Reports des European Forecasting Network (EFN)
Reports des European Forecasting Network (EFN) Das European Forecasting Network...
European Firms after the Crisis – New Insights from the 5th Vintage of the CompNet Firm-level-based Database ...