The effect of compensation benchmarking

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Profile picture of Jing Xie

Topic: The effect of compensation benchmarking—Evidence from share repurchases 

Speaker: Jing Xie, Hong Kong Polytechnic University

Abstract: We find that share repurchases of firms selected as compensation peers (CPs) negatively affect focal firms’ CEO pay. Focal firms’ CEOs respond to increasing repurchases by their peers by repurchasing more of their own shares. The CP herding effect is stronger for small focal firms or those with substantial stock or option-based compensation than for other focal firms. CPs with prominent CEOs have a more significant impact on the focal firm, and the CP effect is stronger for CPs that are larger, have a longer CP relation, or a two-way CP relation. We establish the causal effect of CP herding on repurchases using several methods, including CEO–pair disconnections. Overall, this paper provides evidence on the impact of compensation benchmarking on corporate payout policies. 

Moderator: Kenny Phua, University of Technology Sydney

Date: Wednesday, 27th April 2022
Time: 12-1 pm (Australian Eastern Standard Time)
Venue: This is an online Zoom webinar.

Seminar protocols:

  • The webinar will run for 45 minutes, followed by a 15 minute Q&A session.
  • There will be a moderator for each seminar event, who will facilitate communication and resolve any technical issues.
  • Participants can use the chat facility or raise their had to ask questions during the presentation. The moderator will then alert the speaker at the appropriate time and either ask the questions raised or unmute the participant so they can ask the question directly to the presenter.

Co-ordinator: Kenny Phua

Enquiries: Ray Alonso

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