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Others: Do Clawback Adoptions Influence Capital Investments?

TitleDo Clawback Adoptions Influence Capital Investments?
Authors
KeywordsCompensation clawback
Performance-based compensation
Capital investment
Real effects
Capital investment efficiency
Issue Date2017
Citation
Biddle, GC, Chan, LHL & Joo, JH. Do Clawback Adoptions Influence Capital Investments? (September 20, 2017). Available at SSRN: https://ssrn.com/abstract=3042973 How to Cite?
AbstractWe present evidence that clawback provision adoptions influence capital investment mix via managerial compensation incentives. Specifically, we find for a propensity-matched sample of 931 voluntary clawback adoptions that capital investments shift away from R&D and toward capital expenditures, and for firms with enabling liquidity toward acquisitions, consistent with clawback effects on earnings-linked compensation. Corroborating evidence confirms that these effects are positively related to performance-based pay, growth opportunities, and invariant to risk-toleration incentives, with firms adopting clawbacks also exhibiting capital over-investment. This evidence is timely given a pending SEC rule that would mandate clawbacks for all firms listing on US exchanges.
Persistent Identifierhttp://hdl.handle.net/10722/246857
SSRN

 

DC FieldValueLanguage
dc.contributor.authorBiddle, GC-
dc.contributor.authorChan, LHL-
dc.contributor.authorJoo, JH-
dc.date.accessioned2017-09-27T03:25:13Z-
dc.date.available2017-09-27T03:25:13Z-
dc.date.issued2017-
dc.identifier.citationBiddle, GC, Chan, LHL & Joo, JH. Do Clawback Adoptions Influence Capital Investments? (September 20, 2017). Available at SSRN: https://ssrn.com/abstract=3042973-
dc.identifier.urihttp://hdl.handle.net/10722/246857-
dc.description.abstractWe present evidence that clawback provision adoptions influence capital investment mix via managerial compensation incentives. Specifically, we find for a propensity-matched sample of 931 voluntary clawback adoptions that capital investments shift away from R&D and toward capital expenditures, and for firms with enabling liquidity toward acquisitions, consistent with clawback effects on earnings-linked compensation. Corroborating evidence confirms that these effects are positively related to performance-based pay, growth opportunities, and invariant to risk-toleration incentives, with firms adopting clawbacks also exhibiting capital over-investment. This evidence is timely given a pending SEC rule that would mandate clawbacks for all firms listing on US exchanges.-
dc.languageeng-
dc.rightsThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.-
dc.subjectCompensation clawback-
dc.subjectPerformance-based compensation-
dc.subjectCapital investment-
dc.subjectReal effects-
dc.subjectCapital investment efficiency-
dc.titleDo Clawback Adoptions Influence Capital Investments?-
dc.typeOthers-
dc.identifier.emailBiddle, GC: biddle@hku.hk-
dc.identifier.emailChan, LHL: lhlchan@hkucc.hku.hk-
dc.identifier.emailJoo, JH: jeongjoo@hku.hk-
dc.identifier.authorityBiddle, GC=rp00230-
dc.identifier.authorityChan, LHL=rp01048-
dc.identifier.authorityJoo, JH=rp01796-
dc.description.naturepostprint-
dc.identifier.ssrn3042973-

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