The Impact of CEO and CFO Compensation Incentives on Corporate Policies and Performance

• Main Authors: Chia-Lin Wu, 吳佳璘
• Other Authors: Pi-Hsia Hung
• Format: Others
• Language: zh-TW
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/39998011423190773279

碩士 === 國立暨南國際大學 === 財務金融學系 === 103 === We attempt to study the impact of executive risk-taking incentives on corporate policies and performance. Manager’s human capital is closely tied with the firm’s performance. How to make the equity incentives of executive significantly influence their firms’ policies and performance. We extend the early literature to differentiate risk-taking incentives of chief executive officers (CEO) and chief financial officers (CFO). Following Chava and Purnanandam (2010), we compute two proxies of risk-taking incentives based on the delta and vega. In the paper, we find that CEO's risk-taking incentives significant influence capital structure and stock repurchase. CFO's risk-taking incentives significant influence debt maturity and cash dividend. In addition, we find CEO and CFO equity incentives have extremely close and inseparable relations with performance. That would grow accounting performance of company by increasing compensation incentives when CFO are risk-averter, and market performance would decrease. On the contrary, CFO are risk-lover that the negative relationship or no significance on the accounting performance and no significance on the market performance. There is no conclusive proof that CEO's risk-attitude have difference with significance on corporate performance, the higher CEO incentives, the higher accounting performance, and lower market performance. We confirm that the CFO's risk-attitude have important effect on corporate financial decision making and compensation plans development.