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Dynamics of managerial power and CEO compensation in the course of corporate distress: Evidence from 1992 to 2019.

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  • Additional Information
    • Subject Terms:
      EXECUTIVE compensation; CHIEF executive officers; POWER (Social sciences); STOCKHOLDER wealth
    • Abstract:
      We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992–2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias‐corrected matching estimator, we find that distressed firms reduce managerial board appointments and CEO pay, intensify managerial incentive alignment, and increase CEO turnover. The bulk of CEO compensation changes in distressed firms derives from the performance‐related part of compensation, consistent with the "shareholder value" view of CEO compensation. [ABSTRACT FROM AUTHOR]
    • Abstract:
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