Workshop Series: Robert Tumarkin
The impact of CEO incentive compensation on firm performance is difficult to quantify because performance also affects incentives. To circumvent this problem, I form an estimate of the changes in CEO incentives caused by exogenous stock price movements using a return index for each firm’s peer group and lagged CEO holdings. For the mean incentive level, Tobin’s q increases by 10.0% compared to that of counterfactual firms that lack CEO incentive compensation. I also introduce an ex ante measure of the CEO’s discretion over her incentive portfolio and show that the greater this discretion the less incentives mitigate agency conflicts.
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Robert Tumarkin is a Senior Lecturer in the School of Banking and Finance at the Australian School of Business. He joins the ASB after completing his PhD in Finance at the Stern School of Business, New York University. Rob teaches courses from the undergraduate through the PhD levels in Corporate Finance, Mergers and Acquisitions, Corporate Governance, and Empirical Corporate Finance at UNSW. His current working papers include studies examining the value created by CEO incentive packages, inferring the behavioral biases of executives from option exercise behavior, and determining how buyer perceptions influence home prices. Completed research includes a paper on how Internet message board activity impacts stock prices and market efficiency. Formerly, Rob worked for four and a half years at a New York based fund-of-hedge funds. While there, he was a member of the investment management team that was responsible for investment selection, portfolio construction, and risk management. Before entering the Finance profession, Rob worked for four years as a research engineer and as a business development analyst for a medical device manufacturer. Rob holds a ScB in Biomedical Engineering from Brown University (1995) and MBA (2000), MPhil (2008), and PhD (2010) degrees from the Stern School of Business, New York University. Email: firstname.lastname@example.org