Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation

Chen, Jie; Song, Wei; Goergen, Marc

Abstract

We examine how firms' dividend policy affects the initial compensation of their newly appointed CEOs. We focus on newly appointed CEOs to isolate the effect of dividends on compensation and to provide new insights into an aspect largely neglected by compensation research. We show that the dividend payout is positively related to new CEO compensation. Further, the positive effect of dividends is stronger for firms with no dividend cuts over the past two, three and four years, firms with relatively high institutional ownership, and those with strong boards, consistent with new CEOs receiving higher pay as compensation for greater dividend pressure.

Citation

Chen, J., Song, W., & Goergen, M. (2019). Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation. Journal of Corporate Finance, 56, 458-481. https://doi.org/10.1016/j.jcorpfin.2019.04.004

• Journal Article Type: Article
• Acceptance Date: Apr 8, 2019
• Online Publication Date: Apr 10, 2019
• Publication Date: 2019-06
• Deposit Date: Jul 20, 2021
• Publicly Available Date: Jul 20, 2021
• Journal: Journal of Corporate Finance
• Print ISSN: 0929-1199
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 56
• Pages: 458-481
• DOI: https://doi.org/10.1016/j.jcorpfin.2019.04.004
• Keywords: Strategy and Management; Economics and Econometrics; Finance; Business and International Management
• Public URL: https://nottingham-repository.worktribe.com/output/5809363
• Publisher URL: https://www.sciencedirect.com/science/article/abs/pii/S0929119918304991?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Passing the dividend baton: The impact of dividend policy on new CEOs' initial compensation; Journal Title: Journal of Corporate Finance; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jcorpfin.2019.04.004; Content Type: article; Copyright: © 2019 Elsevier B.V. All rights reserved.