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Paying For Performance In Bankruptcy: Why Ceos Should Be Compensated With Debt , Yair J. Listokin
Faculty Scholarship Series
While managerial performance always plays a critical role in determining firm performance, a manager’s importance assumes a heightened role in bankruptcy. A manager in bankruptcy both runs the firm and helps form a plan of reorganization. In light of this critical role, one would expect that bankruptcy scholarship would place considerable emphasis on the role of CEO compensation in incentivizing managerial performance in bankruptcy. The opposite is true, however. Bankruptcy scholars and practitioners tend to emphasize other levers of corporate governance, such as the role of Debtor-in-Possession financiers, rather than the importance of CEO compensation. This Article seeks to ...