Work

Remuneration, Retention, and Reputation Incentives for Outside Directors

Year: 2004

Type: article

Abstract: ABSTRACT I study incentives received by outside directors in Fortune 500 firms from compensation, replacement, and the opportunity to obtain other directorships. Previous research has only shown these relations to apply under limited circumstances such as financial distress. Together these incentive mechanisms provide directors with wealth increases of approximately 11 cents per $1,000 rise in firm value. Although smaller than the performance sensitivities of CEOs, outside directors' incentives imply a change in wealth of about $285,000 for a 1 standard deviation (SD) change in typical firm performance. Cross‐sectional patterns of director equity awards conform to agency and financial theories.

Source: The Journal of Finance

DOI: 10.1111/j.1540-6261.2004.00699.x

Author: DAVID YERMACK

Institutions: Goethe University Frankfurt, New York University, Deutsche Bundesbank, Freie Universität Berlin

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3121494871

FWCI: 98.85

Cites: 36

Cited by: 841

Related to: 10