TITLE

LAYOFFS, EQUITY-BASED COMPENSATION, AND CEO OWNERSHIP

AUTHOR(S)
Chialing Hsieh; Davidson, Wallace N.
PUB. DATE
October 2008
SOURCE
Journal of the Academy of Business & Economics;10/20/2008, Vol. 8 Issue 3, p142
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
We investigate the relation between CEO equity compensation and layoffs. In particular, we measure the extent of CEO stock selling in the year of the layoffs. We find that CEOs who layoff workers engage in little or no selling of stock acquired through stock-based compensation. Non-layoffs CEOs sell substantial shares after receiving stock compensation. Our results indicate that equity compensation succeeds in lifting the incentive levels of CEOs who announced layoffs, despite the controversy over self-interest layoffs decisions. Moreover, CEOs perceive the restructuring layoffs as value-enhancing activities or tend to avoid conveying negative signals to shareholders by retaining most of their stock-based compensation awarded during the year of layoff announcements.
ACCESSION #
35618386

 

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