The Role of Creditors and CEO Compensation Design: Evidence from Credit Default Swaps

[题目] The Role of Creditors and CEO Compensation Design: Evidence from Credit Default Swaps
[主讲人] 洪洁瑛,埃赛克高等商学院
[主持人] 章勇辉,中国人民大学经济学院
[时间] 2019年9月20日14:00
[地点] 明德主楼729会议室

[摘要] What is the role of creditors in shaping the design of managerial compensation? This paper provides empirical evidence by investigating how the trading of credit default swaps (CDS) shapes the design of CDS-referenced firm’s managerial compensation, especially its risk-taking incentives. We find that CEO compensation vega increases significantly when a firm has CDS referring its debt, and the causal relationship is verified by a set of endogeneity tests. The CDS effect is stronger for firms with larger risk-shifting agency conflict, consistent with the view that the alleviation of creditors’ risk concerns is the main mechanism driving this effect. Additionally, we document that the increase in CEO compensation vega caused by CDS trading results into more risk taking, which, however, does not lead to an improvement in firm performance and shareholder value.

[主讲人简介] Jieying Hong is an assistant professor at ESSEC Business School. She obtained her PhD from Toulouse School of Economics. Her main research interest includes corporate finance, entrepreneurship, compensation, contract theory, asset bubbles and digital economics. She has published articles in various journals, such as  Journal of Business Venturing, Journal of Corporate finance, 经济研究, and金融研究. Her research articles have also been selected into FMA semifinalist for best paper award, FMA top 10 sessions, and SSRN Top download list. Her current research interest focuses on the real implications of financial innovative products and financial technology.