Related Party Transactions, Corporate Governance and CEO Compensation
Document Type
Article
Publication Date
1-1-2017
Publication Title
Journal of Business Finance and Accounting
Volume
44
Issue
2018-05-06
First page number:
854
Last page number:
894
Abstract
Examining the years 2001–2012, we document a decrease in reported CEO related party transactions (RPTs) and an increase in reported outside director RPTs, with the largest change occurring around the 2006 Securities and Exchange Commission (SEC) RPT disclosure changes. Our analysis of the determinants of RPTs and their association with CEO compensation also shows an impact of the SEC disclosure change, as we find support for the weak governance hypothesis in the pre-2006 period and some support for the efficient contracting hypothesis post-2005. While our results vary by model, pre-2006, consistent with weak governance we find that outside director RPTs are positively associated with CEO compensation, with our estimates of the impact ranging from 8 to 18% depending on the model. In the post-2005 period, this result dissipates, and we find some evidence consistent with the efficient contracting hypothesis. Overall we find that the SEC RPT disclosure change appears to have had a significant impact on reported RPTs, the determinants of those RPTs, and the impact of those RPTs on CEO compensation. © 2017 John Wiley & Sons Ltd
Language
english
Repository Citation
Balsam, S.,
Gifford, R. H.,
Puthenpurackal, J.
(2017).
Related Party Transactions, Corporate Governance and CEO Compensation.
Journal of Business Finance and Accounting, 44(2018-05-06),
854-894.
http://dx.doi.org/10.1111/jbfa.12245
