Arbeitspapier
The effect of the Sarbanes-Oxley Act on CEO pay for luck
According to the rent-extraction hypothesis, weak corporate governance allows entrenched CEOs to capture the pay-setting process and benefit from events outside of their controlget paid for luck. In this paper, I find that the independence requirement imposed on boards of directors by the Sarbanes-Oxley Act of 2002 (SOX), together with the governance regulations subsequently introduced by stock exchanges, affects CEO pay structure. In firms whose corporate boards were originally less independent, and thus more affected by these provisions, CEO pay for performance strengthened while pay for luck decreased after adopting SOX. In contrast, those firms that exhibited strong board independence prior to SOX showed little evidence of pay for luck and little change in pay for performance following the adoption of SOX. The results are consistent with the rent-extraction hypothesis, and they are robust to alternative explanations such as asymmetric benchmarks, oligopoly, and managerial talent.
- Language
-
Englisch
- Bibliographic citation
-
Series: Bank of Canada Working Paper ; No. 2008-20
- Classification
-
Wirtschaft
Corporate Finance and Governance: Government Policy and Regulation
Compensation Packages; Payment Methods
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Subject
-
Labour markets
Führungskräfte
Vergütungssystem
Leistungsentgelt
Corporate Governance
Internes Kontrollsystem
USA
- Event
-
Geistige Schöpfung
- (who)
-
Paligorova, Teodora
- Event
-
Veröffentlichung
- (who)
-
Bank of Canada
- (where)
-
Ottawa
- (when)
-
2008
- DOI
-
doi:10.34989/swp-2008-20
- Handle
- Last update
- 10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Paligorova, Teodora
- Bank of Canada
Time of origin
- 2008
Other Objects (12)
The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
How long does it take you to pay? A duration study of canadian retail transaction payment times
PayTech and the d(ata) n(etwork) a(ctivities) of BigTech platforms
Capital structure, pay structure and job termination
The carry trade, portfolio diversification, and the adjustment of the Japanese yen
The impact of operational events on the network structure of the LVTS
The effects of oil price uncertainty on the macroeconomy
On the tail risk premium in the oil market
The role of expenditure switching in the global imbalance adjustment
Evaluating the effect of the Bank of Canada's conditional commitment policy
Nowcasting the global economy
The Doug Purvis Memorial Lecture - Monetary/Fiscal Policy Mix and Financial Stability: The Medium Term Is Still the Message
The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
How long does it take you to pay? A duration study of canadian retail transaction payment times
PayTech and the d(ata) n(etwork) a(ctivities) of BigTech platforms
Capital structure, pay structure and job termination
The carry trade, portfolio diversification, and the adjustment of the Japanese yen
The impact of operational events on the network structure of the LVTS
The effects of oil price uncertainty on the macroeconomy
On the tail risk premium in the oil market
The role of expenditure switching in the global imbalance adjustment
Evaluating the effect of the Bank of Canada's conditional commitment policy
Nowcasting the global economy
The Doug Purvis Memorial Lecture - Monetary/Fiscal Policy Mix and Financial Stability: The Medium Term Is Still the Message
The Carrot and the Stick: The Business Cycle Implications of Incentive Pay in the Labor Search Model
How long does it take you to pay? A duration study of canadian retail transaction payment times
PayTech and the d(ata) n(etwork) a(ctivities) of BigTech platforms
Capital structure, pay structure and job termination
The carry trade, portfolio diversification, and the adjustment of the Japanese yen
The impact of operational events on the network structure of the LVTS
The effects of oil price uncertainty on the macroeconomy
On the tail risk premium in the oil market
The role of expenditure switching in the global imbalance adjustment
Evaluating the effect of the Bank of Canada's conditional commitment policy
Nowcasting the global economy