Three Essays on the Regulation of Executive Compensation
Seiten
This thesis examines the impact of executive compensation regulation on firm value and performance that offer insights for policymakers and researchers.
Executive pay increased severely over the last decades, especially compared to the average employee pay, prompting governments to add new regulations related to executive compensation. To examine how executive pay regulation affects firm value and future firm performance, I exploit recent regulations in the United States and Germany. I present my findings in three papers in this thesis. The first and second papers focus on the CEO pay ratio disclosure mandate introduced in the United States. In the first paper, I examine how investors perceive the implementation of the CEO pay ratio disclosure mandate. I find that investors believe that disclosing high ratios puts firms at a competitive disadvantage and draws attention to their vertical pay inequality. In the second paper, I examine how the level of disclosed pay ratio affects the firm's market value and future firm performance. The results show that investors perceive high pay disparity based on compensation that is not linked to economic factors as detrimental to firm performance. However, the results show that a high vertical pay disparity does not negatively affect firm value when the pay disparity can be explained by economic factors. In particular, the results show that such firms will perform better in the future. In the third paper, I examine how investors perceive a German regulation that forces firms to set a cap on executive compensation. The results show that, on average, investors fear that capping executive compensation will hurt firm value. However, the results of the firm-level analysis show that investors expect different outcomes for firms depending on the ex ante level of abnormal pay and vertical pay disparities. Overall, my work contributes to understanding how investors perceive executive compensation regulation and provides valuable insights for policymakers.
Executive pay increased severely over the last decades, especially compared to the average employee pay, prompting governments to add new regulations related to executive compensation. To examine how executive pay regulation affects firm value and future firm performance, I exploit recent regulations in the United States and Germany. I present my findings in three papers in this thesis. The first and second papers focus on the CEO pay ratio disclosure mandate introduced in the United States. In the first paper, I examine how investors perceive the implementation of the CEO pay ratio disclosure mandate. I find that investors believe that disclosing high ratios puts firms at a competitive disadvantage and draws attention to their vertical pay inequality. In the second paper, I examine how the level of disclosed pay ratio affects the firm's market value and future firm performance. The results show that investors perceive high pay disparity based on compensation that is not linked to economic factors as detrimental to firm performance. However, the results show that a high vertical pay disparity does not negatively affect firm value when the pay disparity can be explained by economic factors. In particular, the results show that such firms will perform better in the future. In the third paper, I examine how investors perceive a German regulation that forces firms to set a cap on executive compensation. The results show that, on average, investors fear that capping executive compensation will hurt firm value. However, the results of the firm-level analysis show that investors expect different outcomes for firms depending on the ex ante level of abnormal pay and vertical pay disparities. Overall, my work contributes to understanding how investors perceive executive compensation regulation and provides valuable insights for policymakers.
Dr. Anamarija Delic, a researcher in the field of economics, was born on June 10, 1991, in the historic city of Zagreb. Her academic journey began at the Faculty of Economics and Business at the University of Zagreb, where she not only completed her bachelor's and master's degrees but also discovered a fervent passion for research. Her interest in exploration and understanding the intricacies of economics guided her to further her education at the prestigious TUM School of Management, affiliated with the Technical University of Munich. Specializing in Finance, Anamarija embarked on a doctoral journey that unearthed significant insights into how executive compensation regulation affects firm value and performance.
| Erscheinungsdatum | 21.03.2024 |
|---|---|
| Sprache | englisch |
| Maße | 210 x 297 mm |
| Gewicht | 1204 g |
| Themenwelt | Naturwissenschaften |
| Recht / Steuern | |
| Schlagworte | Executive compensation • Pay Ratio • Regulation |
| ISBN-10 | 3-7584-8621-1 / 3758486211 |
| ISBN-13 | 978-3-7584-8621-0 / 9783758486210 |
| Zustand | Neuware |
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