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 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.
Author: | Roman InderstORCiDGND, Holger M. MüllerGND |
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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: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2009/12/08 |
Note: | Published in: Review of Financial Studies, 2010, vol. 23, issue 8, pp. 2935-2969 |
HeBIS-PPN: | 220431809 |
Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Institute for Monetary and Financial Stability (IMFS) |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Licence (German): | Deutsches Urheberrecht |