CEO reputation and stock-based compensation

Milbourn, Todd T.

doi:10.1016/s0304-405x(03)00066-7

Cited by 534 publications

(364 citation statements)

References 11 publications

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“…A positive reputation is beneficial because it reduces uncertainty and provides reassurance of an actor's value. For example, because CEO quality is uncertain, executives' reputations provide information to stakeholders (Graffin, Pfarrer, & Hill, 2012) that is relevant for predicting executives' future behavior (e.g., Milbourn, 2003). In turn, these signals benefit CEOs and allow those with a positive signals to claim increased compensation for their performance (e.g., Wade, Porac, Pollock, & Graffin, 2006).…”

Section: Audience-specific Reputationsmentioning

confidence: 99%

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

Ertug

Yogev

Lee

et al. 2016

AMJ

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AcknowledgmentWe would like to thank Tim Pollock and the three anonymous reviewers for their excellent suggestions and guidance. We would also like to thank Martin Gargiulo, Matteo Prato, Heeyon Kim, Abhijith G. Acharya, Fabrizio Castellucci, Yi Tang, and Francois Collet for their valuable feedback, as well as participants at presentations at the Oxford University Centre for Corporate Reputation and at Singapore Management University. We would also like to express our gratitude for the financial support we have received from the Oxford University Centre for Corporate Reputation. The research leading to these results has received funding from the European Research 2 THE ART OF REPRESENTATION: HOW AUDIENCE-SPECIFIC REPUTATIONS AFFECT SUCCESS IN THE CONTEMPORARY ART FIELD ABSTRACTWe study the effects of actors' audience-specific reputations on their levels of success with different audiences in the same field. Extending recent work that has emphasized the presence of multiple audiences with different concerns, we demonstrate that considering audience specificity leads to an improved understanding of reputation effects. Using data on emerging artists in the field of contemporary art from 2001 to 2010, we investigate the manner in which artists' audience-specific reputations affect their subsequent success with two distinct audiences: museums and galleries. Our findings suggest that audience-specific reputations have systematically different effects with respect to success with museums and galleries. Our findings also illuminate the extent to which audience-specific reputations are relevant for emerging research on the contingent effects of reputation. In particular, our findings support our predictions that audiences differ from one another in terms of the extent to which other signals (specifically, status and interaction with other audiences) enhance or reduce the value of audience-specific reputations. Our study thus advances theory by providing empirical evidence for the value of incorporating audience-specific reputations into the general study of reputation.3

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Section: Audience-specific Reputationsmentioning

confidence: 99%

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

Ertug

Yogev

Lee

et al. 2016

AMJ

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“…Milbourn (2003) examines the relation between CEO reputation and stock-based compensation. His work offers four possible observable proxies for CEO reputation: (1) CEO tenure, (2) the number of businessrelated articles containing the CEO's name, (3) whether the CEO is appointed from outside the firm, and (4) industry-adjusted firm performance during the CEO's tenure.…”

Section: Retailmentioning

confidence: 99%

The Spread of Aggressive Corporate Tax Reporting: A Detailed Examination of the Corporate-Owned Life Insurance Shelter

Brown

2011

The Accounting Review

193

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This paper investigates the spread of aggressive corporate tax reporting by modeling a firm's decision to adopt the corporate-owned life insurance (COLI) shelter. I use a sample of known COLI participants to examine whether certain firm characteristics are associated with the decision to adopt a COLI shelter. I find some evidence that firms with higher performancematched discretionary accruals are more likely to adopt a COLI shelter, suggesting a positive relation between aggressive financial reporting and aggressive tax reporting. I also find that firms with greater capital market visibility are less likely to adopt a COLI shelter, consistent with a potential reputational cost for being associated with aggressive tax avoidance activities. Further, my results suggest that COLI adopters are generally R&D intensive firms with low leverage and few foreign operations. In addition to firm specific characteristics, I consider two explanations for the spread of COLI adoption motivated by theory on diffusion of innovations and institutional isomorphism. I investigate whether firms imitate prior COLI adopters and whether COLI adoption spreads through common auditors. My results are not consistent with an imitation vii explanation. Further, my results suggest that having the same auditor as a prior COLI adopter does not increase the likelihood that a firm will adopt COLI.viii Table of PART I 6Chapter The tax shelter industry also distorts allocation of economic resources. Tax shelter activity diverts resources away from the government toward accountants, lawyers and others who develop and promote tax shelters. Moreover, according to theories of corporate tax incidence, engaging in a tax shelter cannot make a corporation, per se, better off. The benefits from reducing the corporation's tax bill will ultimately accrue to its shareholders through higher stock prices, its employees through higher wages, or its customers through lower prices. Exactly how the benefits will be shared is unknown, but Slemrod (2004) Frank et al. 2006). 3 However, ETRs and book-tax differences are noisy measures of aggressive tax reporting. ETRs vary with profitability, industry differences in the reporting of revenue and expenses, and legitimate tax planning opportunities. Consequently, it is difficult to distinguish lower ETRs due to better tax planning from those due to aggressive avoidance or shelter activity. List of TablesTreasury's (1999) report suggests that the growing gap between financial statement income and 2 Many studies rely on Bankman's (2004a) working definition of a tax shelter as a "(1) tax motivated; (2) transaction unrelated to a taxpayer's normal business operations; that (3) under a literal reading of some relevant legal authority; (4) produces a loss for tax purposes in excess of any economic loss; (5) in a manner inconsistent with legislative intent or purpose." See also Bankman (1999).3 Graham and Tucker (2006) identify known tax shelter participants. However, their study focuses on firms' debt policy decisions, no...

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“…Since the data for external directorships are not available before 1998, the sample size with this measure of CEO ability is significantly reduced. We follow Milbourn (2003) and define our second and third proxies for CEO ability as the industry-adjusted ROA and stock return, respectively. We use the two-digit SIC code to define industries.…”

Section: Experience Hypothesismentioning

confidence: 99%

“…In contrast, the empirical work on the relationship between risk-taking and implicit incentives, in particular the incentives of managers to secure or advance their careers, is significantly less despite the arguments that career concerns matter for risk-taking incentives (e.g., Hermalin, 1993;Holmstrom, 1999;Chen, 2013;Fu & Li, 2014). Because newly promoted CEOs may be more concerned about their career prospects than long-serving CEOs, prior studies have used the tenure of CEOs as a proxy for career concerns (e.g., Gibbons and Murphy, 1992;Hong et al, 2000;Milbourn, 2003;Cremers & Palia, 2010). In this study, we extend this line of work by studying the effect of CEO tenure on risk-taking.…”

Section: ⅰ Introductionmentioning

confidence: 99%

CEO Tenure and Risk-Taking

Chen¹,

Zheng²

2014

Glob Bus Financ Rev

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A B S T R A C TThis paper presents a systematic analysis of the effect of CEO tenure on risk-taking. We document an overall positive effect of tenure on risk-taking, which is inconsistent with a view of tenure as primarily an indicator of human capital investment. Although we cannot rule out the explanations of risk-taking based on the power and experience effects of tenure, our results are more consistent with interpreting tenure as an indicator of the career concerns of a manager. Consistent with this interpretation and recent theoretical work, we show that the effect of CEO tenure on risk-taking depends on the information asymmetry about CEO ability.

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CEO reputation and stock-based compensation

Cited by 534 publications

References 11 publications

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

The Art of Representation: How Audience-specific Reputations Affect Success in the Contemporary Art Field

The Spread of Aggressive Corporate Tax Reporting: A Detailed Examination of the Corporate-Owned Life Insurance Shelter

CEO Tenure and Risk-Taking

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