Journal article
The relation between earnings-based measures in firm debt contracts and CEO pay sensitivity to earnings
Journal of accounting & economics, Vol.61(1), pp.1-22
02/01/2016
DOI: 10.1016/j.jacceco.2015.11.002
Abstract
I investigate how implicit incentives provided by earnings-based debt covenants affect the structure of CEO compensation contracts. This provides a new and unique view of how the CEO׳s incentives are shaped by not only his compensation contract but also debt contracts. I find when debt contracts contain an earnings-based covenant, the CEO׳s pay sensitivity to earnings is muted. Additionally, I find some evidence that pay sensitivity to earnings varies with earnings-based covenant slack. This study provides evidence consistent with shareholders rebalancing the CEO׳s earnings incentives in the presence of earnings-based covenants, thereby tilting incentives away from earnings performance.
Details
- Title: Subtitle
- The relation between earnings-based measures in firm debt contracts and CEO pay sensitivity to earnings
- Creators
- Adrienne Rhodes - Texas A&M University
- Resource Type
- Journal article
- Publication Details
- Journal of accounting & economics, Vol.61(1), pp.1-22
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jacceco.2015.11.002
- ISSN
- 0165-4101
- eISSN
- 1879-1980
- Language
- English
- Date published
- 02/01/2016
- Academic Unit
- Accounting
- Record Identifier
- 9984380384302771
Metrics
1 Record Views