Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation

Jie Chen, Wei Song (w.song@swansea.ac.uk) and Marc Goergen
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Jie Chen: Cardiff Business School, Cardiff University
Wei Song: School of Management, Swansea University

No 2018-18, Working Papers from Swansea University, School of Management

Abstract: We examine how firms’ dividend policy affects the initial compensation of their new CEOs. We focus on new CEOs to isolate the effect of dividends on compensation and to provide new insights into an aspect largely neglected in compensation research. We show that the dividend payout is positively related to new CEO compensation and that this positive relation remains after addressing potential endogeneity concerns. Further, the positive effect of dividends is stronger for firms with no dividend cuts over the past two, three and four years, firms with relatively high institutional ownership, and those with strong boards, consistent with new CEOs receiving higher pay as compensation for greater dividend pressure.

Keywords: CEO compensation; New CEOs; Dividend policy; Corporate governance. (search for similar items in EconPapers)
JEL-codes: G30 G35 J33 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2018-02-24
New Economics Papers: this item is included in nep-cfn
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https://rahwebdav.swan.ac.uk/repec/pdf/WP2018-18.pdf First version, 2018 (application/pdf)

Related works:
Journal Article: Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:swn:wpaper:2018-18

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