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Stock-Based versus Cash Compensation: Does the Correlation between Earnings and Stock Returns Matter?

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Authors
Shin, Jae Yong
Issue Date
2009-06
Publisher
College of Business Administration (경영대학)
Citation
Seoul Journal of Business, Vol.15 No.1, pp. 121-163
Keywords
returns-earnings correlationexecutive compensationstock-based pay
Abstract
I empirically examine the role of the correlation between earnings and

stock returns in determining the structure of compensation packages for

top executives. I develop two competing hypotheses on the relation

between the returns-earnings correlation and the structure of executive

compensation and empirically test the association between the returnsearnings

correlation and use of stock-based pay. The results show that

the returns-earnings correlation is positively associated with the use of

stock-based compensation, after controlling for other determinants of

stock-based compensation such as firm size and firms growth

opportunities.
ISSN
1226-9816
Language
English
URI
https://hdl.handle.net/10371/32138
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Seoul Journal of Business (SJB)Seoul Journal of Business Volume 15, Number 1/2 (2009)
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