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https://hdl.handle.net/2440/54138
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dc.contributor.author | Rosser, B. | - |
dc.contributor.author | Canil, J. | - |
dc.date.issued | 2008 | - |
dc.identifier.citation | Corporate Ownership and Control, 2008; 6(1):115-126 | - |
dc.identifier.issn | 1727-9232 | - |
dc.identifier.issn | 1810-3057 | - |
dc.identifier.uri | http://hdl.handle.net/2440/54138 | - |
dc.description | © 2008 Social Science Electronic Publishing, Inc | - |
dc.description.abstract | Schaefer (1998) and Baker and Hall (2004) posit a firm size effect for regular executive compensation but not specifically for executive stock option grants. They propose an inverse relation between pay-performance sensitivity and firm size along with a positive relation between the marginal productivity of executive effort and firm size. The product of pay-performance sensitivity and executive productivity is 'incentive strength'. They find a weakly positive association between incentive strength and firm size. We substitute Hall and Murphy's (2002) pay-performance sensitivity metric to detect a firm size effect in CEO stock option grants. After adjusting for small-firm risk aversion and private diversification 'clienteles', we document evidence of a residual small-firm effect impacting on incentive strength principally through grant size. Given lower small-firm deltas, grant size appears to have been increased by compensation committees to ensure small-firm CEOs are not under-compensated relative to their large-firm counterparts. We also find that firm complexity influences pay-performance sensitivity as well, but not labor productivity (proxying for CEO productivity). No evidence is found that firm smallness and complexity impact on labor productivity. However, we empirically confirm a negative relation between pay-performance sensitivity and firm smallness and, by implication, firm complexity. | - |
dc.description.uri | http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1097396 | - |
dc.language.iso | en | - |
dc.publisher | Virtus Interpress | - |
dc.source.uri | http://dx.doi.org/10.22495/cocv6i1p12 | - |
dc.subject | executive stock options | - |
dc.subject | pay-performance sensitivity | - |
dc.subject | firm size | - |
dc.title | Is there a firm-size effect in CEO stock option grants? | - |
dc.type | Journal article | - |
dc.identifier.doi | 10.22495/cocv6i1p12 | - |
pubs.publication-status | Published | - |
dc.identifier.orcid | Canil, J. [0000-0002-3646-4320] | - |
Appears in Collections: | Aurora harvest Business School publications |
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