CEO attributes, compensation, and firm value: Evidence from a structural estimation / by T. Beau Page
text
xxu
Amsterdam
Elsevier
May 2018
monographic
eng
Pages 378-401
T. Beau Page
Abstract
I present and estimate a dynamic model of chief executive officer (CEO) compensation and effort provision. I find that variation in CEO attributes explains the majority of variation in compensation (equity and total) but little of the variation in firm value. The primary drivers of cross-sectional compensation are risk aversion and influence on the board. Additionally, I estimate the magnitude of CEO agency issues. Removing CEO influence increases shareholder value in the typical firm by 1.74%, making CEOs risk neutral increases shareholder value by 16.12%, and removing all agency frictions increases shareholder value by 28.99%.
Journal of Financial Economics 128 (2)
0304-405X
190323