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Open Market Share Repurchase Programs And Corporate Governance: Company Performance, Gary Caton, Jeremy Goh, Yen Teik Lee, Scott C. Linn
Open Market Share Repurchase Programs And Corporate Governance: Company Performance, Gary Caton, Jeremy Goh, Yen Teik Lee, Scott C. Linn
Research Collection Lee Kong Chian School Of Business
Payout policies based on share repurchase programs provide greater flexibility than do those based on cash dividends. We develop and test an empirical model in which strongly-governed companies outperform weakly-governed companies after announcing share repurchase programs. Our findings include positive associations between strong governance and both post-announcement adjusted operating performance and abnormal stock returns. The results are robust to sample selection bias, different sample criteria, governance measurement, and various control variables. In addition, governance strength is associated with larger post-announcement changes in CEO incentive compensation and merger and acquisition activity, both of which we argue are consistent with strongly-governed companies …
When Less Is More: The Benefit Of Limits On Executive Pay, Peter Cebon, Benjamin Hermalin
When Less Is More: The Benefit Of Limits On Executive Pay, Peter Cebon, Benjamin Hermalin
Peter Cebon
We derive conditions under which limits on executive compensation can enhance efficiency and benefit shareholders (but not executives). Having their hands tied in the future allows a board of directors to credibly enter into relational contracts with executives that are more efficient than performance-contingent contracts. This has implications for the ideal composition of the board. The analysis also offers insights into the political economy of executive-compensation reform.