Finance Cluster Seminar: Spencer Martin
Why is there so much similarity in executive compensation packages of firms? Prior literature identifies clear patterns in firms sharing directors, in firms sharing compensation consultants, or in firms simply sharing industry membership. We introduce recently developed dynamic stochastic network techniques to analyze all three channels simultaneously for the first time. The dynamic technology has a further benefit in investigating board relationship evolution, rather than simple imitation, as a possible reason for package design similarities. The dynamic approach brings us several new findings. First, we find little evidence that having the same compensation consultant is the primary determinant of similarity. Instead, we show that sharing directors leads firms to imitate compensation package features. Second, our results suggest that firms are less likely to form ties with other firms with a higher proportion of fixed versus variable compensation. Finally, we document that boards with fewer females are more likely to include higher proportions of options compensation in their packages.
Spencer completed his PhD at the Wharton School, University of Pennsylvania, and joined the Faculty in 2009 from Carnegie Mellon University. His research interests include investments, empirical asset pricing, and behavioral finance. He has published widely in professional journals as well as in internationally reviewed academic journals including the Journal of Financial Economics, Review of Financial Studies, Journal of Portfolio Management, and the Journal of Finance.
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