Three essays in corporate restructurings, executive compensation and corporate governance mechanisms.

详细信息   

• 作者：Sanchez ; Juan M.
• 学历：Doctor
• 年：2006
• 导师：Reitenga, Austin L.
• 毕业院校：The University of Texas
• 专业：Business Administration, Accounting.;Business Administration, Banking.
• ISBN：9780542809194
• CBH：3227771
• Country：USA
• 语种：English
• FileSize：6882404
• Pages：135

文摘

Prior research (i.e., Dechow, Huson and Sloan 1994; Adut, Cready and Lopez 2003) documents that compensation committees (CC) intervene in the compensation process to shield the Chief Executive Officer's (CEO) cash compensation (Salary + Bonus) from the earnings-decreasing effects of restructuring charges. In this dissertation, I extend this line of research by (i) identifying three factors (i.e., restructuring quality, restructuring component type, and corporate governance mechanisms) that influence the cash compensation shielding decision, (ii) examining alternate forms of CC intervention beyond shielding CEO cash compensation (i.e., adjustments to equity and/or "other" compensation) and (iii) determining whether CC intervention extends to other classes of executives (i.e., next four highest paid executives) besides the CEO.;To test the hypotheses/research questions developed in this dissertation, I construct a sample of 625 firms (3,059 restructuring charges) that are members of the S&P500 index. The main findings of this dissertation are summarized as follows. With respect to CEO cash compensation shielding, I find that CCs shield restructuring charges to a greater extent when the restructuring is of high quality (i.e., restructuring is associated with improvements in operating performance). I also find that CCs fully shield components of the charge that have a cash flow effect (e.g., employee layoffs) but do not shield those components that have no cash flow effect (e.g., asset write-offs). Furthermore, I find that corporate governance mechanisms influence the relationship between restructuring quality and the shielding decision. In particular, I find that when shareholder rights are relatively stronger, high quality restructurings are fully shielded. Similarly, when blockholder ownership is relatively higher, results suggest that high quality restructurings are fully shielded while low quality restructurings are associated with a penalty to CEOs' cash compensation.;When examining alternate forms of CC intervention, I find that CCs grant additional equity compensation (e.g., stock options and stock grants) as a result of the restructuring. Importantly, this form of CC intervention seems to be, at least in part, conditional on the degree of cash compensation shielding. It appears that as the degree of cash compensation shielding decreases (increases), equity compensation increases (decreases), which is consistent with the idea that CCs substitute equity compensation shielding for cash compensation shielding. Moreover, I find that the restructuring charge is not associated with "other" compensation (e.g., long-term incentive plans, special payments, etc), which implies that other compensation is shielded from restructuring charges.;Furthermore, I find that non-CEO executives are partially shielded from the earnings-decreasing effects of restructuring charges. Interestingly, results suggest that the degree of shielding for non-CEO executives' cash compensation is greater relative to the CEO's, and that the degree of shielding for non-CEO executives with greater levels of responsibility does not differ from the degree of cash compensation shielding for non-CEO executives with relatively lower levels of responsibility.;Finally, sensitivity analysis suggests that, generally speaking, the phenomenon of CC intervention (i.e., cash compensation shielding and/or adjustments to equity and other compensation) is limited to firms that are members of the S&P500 firms.