CEO Pay Slice, Board Independence and Price Informativeness

• Main Authors: Bing-Rong Lin, 林秉融
• Other Authors: Hsien-Hsing Liao
• Format: Others
• Language: en_US
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/46073227425543333408

碩士 === 國立臺灣大學 === 財務金融學研究所 === 100 === Bebchuk, Cremers, and Peyre (2011) display that CEO Pay Silce (CPS), the ratio of the CEO''s total compensation to the aggregate compensation of the firm''s top-five executive team, is related to agency problems. This study investigate the relationship between CEO Pay Slice (CPS) and board monitoring－board independence or stock market monitoring－price informativeness. We find that, controlling for well known variables, CPS is positively related to board independence and negatively associated with price informativeness. The empirical results also reveal that CEOs with higher CPS are more able to extract rents at the expense of shareholders'' wealth when price informativeness is lower even under an internal monitoring of a high ratio of independent directors. This is consistent with the hypothesis that the information-holding behaviors of entrenched CEOs reduce private information flow to the stock market and erode effectiveness of boards'' monitoring.