Diversification, CEO Turnover and Executive Compensation

• Main Authors: Kuan-Hsien Ho, 何冠嫻
• Other Authors: Ping-hsun Huang
• Format: Others
• Language: en_US
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/57828587390735046387

碩士 === 國立成功大學 === 財務金融研究所 === 97 === This study examines whether diversified firms have principal-agent problem. In this paper, we illustrate a different approach to test these issues for U.S. sample during the period of 2002-2007. We select two measures to examine agency implication of diversification: CEO turnover and CEO compensation. We find that: CEO turnover is less sensitive to firm performance for diversified firms, and pay-performance sensitivity is weaker for diversified firms. Additionally, our results are robust to alternative measures of corporate performance. Taken together, our results support the argument that diversified firms are characterized by severe agency conflicts.