1、上市公司高管股权激励计划外文翻译文献上市公司高管股权激励计划外文翻译文献(文档含中英文对照即英文原文和中文翻译)原文：Investor pricing of CEO equity incentivesJeff P. BooneInder K. KhuranaK. K. RamanAbstractThe main purpose of this paper is to explore CEO compensation in the form of stock and options.The objective of CEO compensation is to better align CEO-
2、shareholder interestsbyinducingCEOstomakemoreoptimal(albeitrisky) investment decisions. However, recent research suggests that these incentives have a significant down-side (i.e., they motivate executives to manipulate reported earnings andlowerinformationquality).Giventheconflictbetweenthepositive
3、CEO-shareholder incentive alignment effect and the dysfunctional information quality effect, it is an open empirical question whether CEO equity incentives increase firm value. We examine whether CEO equity incentives are priced in the firm-specific ex ante equity risk premium over the 1992 2007 tim
4、e period. Our analysis controls for two potential structural changes over this time period. The first is the 1995 Delaware Supreme Court ruling which increased protection from takeovers (and decreased risk)for Delaware incorporated firms. The second is the 2002 Sarbanes Oxley Act which impacted corp
5、orate risk taking, equity incentives, and earnings management. Collectively, our findings suggest that CEO equity incentives, despite being associated with lower information quality, increase firm value through a cost of equity capital channel.Keywords：CEO equity incentives，Information quality，Cost
6、of equity capitalIntroductionIn this study, we investigate investor pricing of CEO equity incentives for a large sample of US firms over the period 1992 2007.Because incentives embedded in CEO compensation contracts may be expected to influence policy choices at the firm level, our objective is to e
7、xamine whether CEO equity incentives influence firm value through a cost of equity capital channel.Prior research (e.g., Jensen et al. 2004; Jensen and Murphy 1990) suggests that equity- based compensation, i.e., CEO compensation in the form of stock and options, provides the CEO a powerful induceme
8、nt to take actions to increase shareholder value (by investing in more risky but positive net present value projects). Put differently, equity incentives are expected to help mitigate agency costs by aligning the interests of the CEO with those of the shareholders, and otherwise help communicate to
9、investors the important idea that the firms objective is to maximize shareholder wealth (Hall and Murphy 2003).However, recent research contends that equity incentives also have a perverse or dysfunctional downside. In particular, equity-based compensation makes managers more sensitive to the firms
10、stock price, and increases their incentive tomanipulate reported earningsi.e., to create the appearance of meeting or beating earnings benchmarks (such as analysts forecasts)in an attempt to bolster the stock price and their personal wealth invested in the firms stock and options (Bergstresser and P
11、hilippon 2006; Burns and Kedia 2006; Cheng and Warfield 2005). Stated in another way, CEO equity incentives can have an adverse effect on the quality of reported accounting information. As noted by Bebchuk and Fried (2003) and Jensen et al. (2004), bypromoting perverse financial reporting incentives
12、 and lowering the quality of accounting information, equity-based compensation can be a source of, rather than a solution for, the agency problem.Despite these arguments about the putative ill effects of equity incentives, equity-based compensation continues to be a salient component of the total pa
13、y packages for CEOs. Still, given the conflict between the positive incentive alignment effect and the dysfunctional effect of lower information quality, it is an open empirical question whether CEO equity incentives increase firm value. To our knowledge, prior research provides mixed evidence on th
14、is issue. For example, Mehran (1995) examines 19791980 compensation data and finds that equity-based compensation is positively related to the firm s Tobins Q. By contrast, Aboody (1996) examines compensation data for a sample of firms for years 1980 through 1990, and finds a negative correlation be
15、tween the value of outstanding options and the firms share price, suggesting that the dilution effect dominates the options incentive alignment effect. Moreover, both these studies are based on dated (i.e., pre-1991) data.In our study, we examine whether CEO equity incentives are related to the firm
16、-specificex ante equity risk premium, i.e., the excess of the firms ex ante cost of equity capital over the risk-free interest rate (a metric discussed by Dhaliwal et al. 2006).Consistent with Core and Guay (2002), we measure CEO equity incentives as the sensitivity of the CEOs stock and option port
17、folio to a 1 percent change in the stock price. Based on a sample of 16,502firm-yearobservationsovera16 year period (19922007), we find CEO equity incentives to be negatively related to the firms ex ante equity risk premium, suggesting thatthe positive incentive alignment effect dominates the dysfun
18、ctional effect of lower information quality.In other analysis, we attempt to control for two regulatory (structural) changes that occurred during the 19922007 time period of our study.As pointed out by Daines (2001), regulatory changes can have an impact on firm values and returns as well as the str
19、ucture of executive compensation. First, Low (2009) finds that following the 95 Delaware Supreme Court ruling that resulted in greater takeover protection, managers reduced firm risk by turning downrisk-increasing(albeitpositiveNPV) projects.In response, firms increased CEO equity incentives to miti
20、gate the risk aversion. Potentially, the impact of the Delaware ruling on managers risk aversion and the follow-up increase in equity incentives (to mitigate the increase in managers risk aversion following the ruling) may have resulted in a structural change in our sample at least for firms incorpo
21、rated in Delaware. To control for this potential structural impact, we perform our analysis for Delaware incorporated firms for 19962007 separately. Our results suggest that the favorable effect of CEO equity incentives on firm value (asreflected in the lower ex ante equity risk premium) is similar
22、for Delaware firms and other firms.Second, a number of studies (e.g., Cohen et al. 2007, 2008; Li et al. 2008) indicate that the2002 Sarbanes Oxley Act (SOX) lowered equity incentives(i.e., reduced the proportion ofequity incentives to total compensation post-SOX), reduced managerial risk taking, de
23、creased spending on R&D and capital expenditures, and reduced accruals-based earnings managementwhile increasing real earnings management. Since real earnings management is potentiallymore difficult for investors to detect than accruals-based earnings management, a possible consequence of SOX could
24、be an increase in agency costs since 2002. To control for the potential structural changes imposed by SOX both in terms of expected returns and the level of equity incentives, we perform our analysis for the pre-SOX and post-SOX time periods separately. For each of the two time periods, our results
25、suggest a favorable effect of CEO equity incentives on firm value (as reflected in the lower ex ante equity risk premium), although the effect appears to be stronger in the post-SOX period.Our study contributes to the literature on the valuation of equity incentives. We provide (to our knowledge) fi
26、rst-time evidence on the relation between CEO equity incentives and the ex ante cost of equity capital. Prior research has focused by and large on the consequences of managerial equity incentives for firm performance (Mehran 1995; Hanlon et al.2003) and risk taking (Rajgopal and Shevlin 2002; Coles
27、et al. 2006; Hanlon et al. 2004) rather than on valuation per se.As noted previously, to our knowledge only two prior studies (Aboody1996 and Mehran 1995, both based on pre-1991 data) have examined the pricing of managerial equity incentives, with mixed results.In our study, we provide evidence on t
28、he valuation effects of CEO equity incentives based on more recent (19922007) data. By focusing on more recent data, our findings relate to a growing line of research on the association between equity-based compensation and accounting information quality. Specifically, Coffee (2004) suggests that th
29、e $1 million limit on the tax deductibility of cash compensation for senior executives imposed by Congress in 1993 motivated firms to make greater use of equity compensation which, in turn, increased the sensitivity of managers to the firms stock price. Bergstresser and Philippon (2006) and Cheng an
30、d Warfield (2005) provide evidence which suggests that equity incentives are positively related to the magnitudeof accruals-based earnings management. Similarly, Burns and Kedia (2006) and Efendi et al. (2007) report CEO equity incentives to be positively related to accounting irregularities and the
31、 subsequent restatement of previously issued financial statements. Thus, prior research suggests that equity-based compensation has a negative effect on the quality of earnings reported by firms. Consistent with several published empirical studies that support the notion that lower information quali
32、ty is priced in a higher cost of equity capital (e.g., Bhattacharya et al. 2003; Francis et al. 2005), CEO equity incentives could potentially lower firm value by increasing the firm-specific equity risk premium.As noted previously, we document that CEO equity incentives (despite the associated lower information quality) are related negatively to the firms ex ante equity risk premium, implying that equity incentives increase firm value by lowering the firms cost of equity
