Showing papers by "David Yermack published in 1999"
TL;DR: This article found that stock price reactions to independent director appointments are significantly lower when the CEO is involved in the selection of new directors compared to when no CEO involvement is required, and they found that companies remove CEOs from involvement in board selection.
Abstract: We study whether CEO involvement in the selection of new directors influences the nature of appointments to the board. When the CEO serves on the nominating committee or no nominating committee exists, firms appoint fewer independent outside directors and more gray outsiders with conflicts of interest. Stock price reactions to independent director appointments are significantly lower when the CEO is involved in director selection. Our evidence may illuminate a mechanism used by CEOs to reduce pressure from active monitoring, and we find a recent trend of companies removing CEOs from involvement in director selection.
1,030 citations
TL;DR: In this paper, the authors examine the effect of CEO stock ownership on leasing and find that CEOs with large ownership stakes engage in more leasing to reduce their exposure to obsolescence and other asset-specific risks.
Abstract: In this empirical study, we examine the effect of CEO stock ownership on leasing. Although financial contracting theory suggests that ownership structure is potentially an important determinant of debt financing and leasing, its effect on leasing has not been previously explored. We also control for explanatory factors that have been found important in other leasing studies. We find that CEO ownership is positively related to companies' leasing and debt financing activity, consistent with contracting theory. This suggests that CEOs with large ownership stakes engage in more leasing to reduce their exposure to obsolescence and other asset-specific risks.
49 citations
Book•
01 Jan 1999
TL;DR: Hallock et al. as discussed by the authors discussed the winner-takes-all view of CEO incentive in Germany, Japan, and the U.S. and concluded that the Winner-Takes-All approach is not the best way to pay CEOs.
Abstract: Introduction J. Carpenter, D. Yermack. Part I:- 1. Top Executive Incentives in Germany, Japan and the U.S.: A Comparison S.N. Kaplan. 2. Corporate Governance, Executive Pay and Performance in Europe M.J. Conyon, J. Schwalbach. 3. A Better Way to Pay CEOs? B.J. Hall. 4. Discussion: The Winner-Takes-All: An Alternative View of CEO Incentives T.T. Milbourn. Part II:- 5. Dual Agency: Corporate Boards with Reciprocally Interlocking Relationships K.F. Hallock. 6. Discussion A.H. Rosenbloom. Part III:- 7. The Rise and Fall of Executive Share Options in Britain B.G.M. Main. 8. Patterns of Employee Stock Option Exercises in the United States S. Huddart. 9. Discussion S. Matsunaga. 10. Discussion J. Samuels.
26 citations
TL;DR: Brooke Group's actions, which included promises to cooperate in litigation against its rivals, spurred other companies to reach settlements on less favorable terms as mentioned in this paper, led to massive wealth destruction within the tobacco industry but impressive returns for sharehoders of Brooke Group.
Abstract: We examine value creation and destruction in the tobacco industry due to the radical litigation strategy pursued by Brooke Group and its CEO, Bennett LeBow. Brooke Group has a tiny market share, low margins, high leverage, and a high concentration of managment ownership. Beginning in 1996 the firm reached settlements in lawsuits brought against all cigarette companies by class action plaintiffs and U.S. state governmetns. Brooke Group's actions, which included promises to cooperate in litigation against its rivals, spurred other companies to reach settlements on less favorable terms. The settlements eventurally led to massive wealth destruction within the tobacco industry but impressive returns for sharehoders of Brooke Group.
2 citations