The Relationship Between Monitoring Mechanism And Incentive Pay Performance Sensitivity- The US Bank Holding Company

• Main Authors: Li, Kaimou, 李凱貿
• Other Authors: Chan, Minlee
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/79775585015039232492

碩士 === 靜宜大學 === 財務金融學系 === 100 === The agency problem between shareholders and management may be mitigated through the linkage of the executive compensation to firm performance. However, the executives have been found to be over-paid even though the firm performance is poor. Especially, the financial crisis of 2008 had highlighted the problems of “fat cat”. Therefore, to strengthen the corporate governance mechanism has been proposed to curb this phenomenon. Therefore, this study uses a sample of 172 U.S. bank holding companies during period 1996 to 2008 to examine the relationship between governance mechanism and the sensitivity of CEO incentive pay to bank performance. The duality of CEO also serving as the president of the board and subordinated debt are respectively used as proxies for internal and external monitoring mechanism in this study. The empirical results find that CEO stock option pay will increase and the sensitivity of CEO stock option pay to bank performance will be weakened when the CEO also serves as the president of the board. This result confirms the substitution relationship between internal governance mechanism and incentive pay mechanism. Moreover, we also evidence that the sensitivity of CEO stock option pay to bank performance will be strengthened when bank do issue subordinate debt.