Getting the Incentives Right: Backfilling and Biases in Executive Compensation Data / CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences
Abstract
Laura Starks from University of Texas at Austin will present two papers:
Getting the Incentives Right: Backfilling and Biases in Executive Compensation Data
The ExecuComp compensation database is commonly used in empirical research. We document, however, that when firms and executives are added to the database there is systematic backfilling. The nature of the backfilling process can lead to over-sampling of certain types of firms and managers, generating a data-conditioning bias. We identify which observations were backfilled and find that backfilled data differ along important dimensions, ranging from firm performance to the level and structure of manager compensation. We highlight several relations in which failure to account for backfilling can significantly impact inference. We offer methods to control for backfilling in future research.
CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences
We examine CEO tournament structure (measured as the ratio of pay between the CEO and other top executives) using a cross-country sample and find it to be steeper in the U.S. than in other countries. Testing the primary implications of tournament theory, we find that across countries, the tournament structure tends to be positively related to firm value. Further, we find that the tournament structure itself varies across firms systematically according to firm and country characteristics. In particular, the cultural values of Power distance, Fair income differences and Competition are significantly associated with differences in tournament structures.
This event is an Erasmus Finance Seminar. The Erasmus Finance Seminar series brings prominent researchers in Finance from all over the world to Rotterdam.
