CEO replacement under private information

We study a model of “information-based entrenchment” in which the CEO has private information that the board needs to make an efficient replacement decision. Eliciting the CEO’s private information is costly, as it impli
We study a model of “information-based entrenchment” in which the CEO has private information that the board needs to make an efficient replacement decision. Eliciting the CEO’s private information is costly, as it implies that the board must pay the CEO both higher severance pay and higher on-the-job pay. While higher CEO pay is associated with higher turnover in our model, there is too little turnover in equilibrium. Our model makes novel empirical predictions relating CEO turnover, severance pay, and on-the-job pay to firm-level attributes such as size, corporate governance, and the quality of the firm’s accounting system.
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Metadaten
Author:Roman Inderst, Holger Müller
URN:urn:nbn:de:hebis:30-72972
URL:http://www.imfs-frankfurt.de/fileadmin/user_upload/pdf/WP_2009_29_Inderst.pdf
Parent Title (German):Working paper series / Institute for Monetary and Financial Stability ; 29
Series (Serial Number):Working Paper Series : Institute for Monetary and Financial Stability (29)
Document Type:Working Paper
Language:English
Year of Completion:2009
Year of first Publication:2009
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2009/12/08
Note:
Published in: Review of Financial Studies, 2010, vol. 23, issue 8, pp. 2935-2969
HeBIS PPN:220431809
Institutes: Institute for Monetary and Financial Stability (IMFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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