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|Title: ||Pay Me Later: Inside Debt and Its Role in Managerial Compensation|
|Authors: ||Sundaram, Rangarajan K.|
Yermack, David L.
|Issue Date: ||16-May-2005 |
|Series/Report no.: ||CLB-06-003|
|Abstract: ||Inside debt, such as pensions and deferred compensation, constitutes a
widely-used form of executive compensation, yet the the valuation and
incentive effects of these instruments have been almost entirely
overlooked by prior work. Our paper initiates this line of research.
Among our findings are that pensions constitute a significant component
of overall compensation; that CEO compensation in most firms exhibits a
balance between debtand equity-based incentives, with the balance
shifting systematically away from equity and toward debt as CEOs grow
older; that CEOs with high debt-based incentives manage their firms
conservatively to reduce default risk; and that pension plan
compensation strongly influences patterns of CEO turnover and CEO cash compensation.|
|Appears in Collections:||NYU Pollack Center for Law & Business Working Papers|
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