The impact of the corporate governance reform on chief financial officer compensation.

摘要

I study the impact of the Corporate Governance Reform on CFO compensation level and structure. The Reform has not only increased CFOs' responsibilities and total risk exposure, but it also has the potential to strengthen the board's monitoring role. Using COOs as a control group, I document the following evidence: there is a decrease (increase) in the incentive weights on public performance measures for CFO cash compensation in firms with both a strong (weak) board structure and a high (low) proportion of uncontrollable risk in the post-Reform period compared with the pre-Reform period. Similar but weaker results hold for CFO total compensation. Further, I find a significant difference in performance incentive weight changes between firms with strong board structure and firms with weak board structure, suggesting that board monitoring and incentive pay are complementary monitoring mechanisms. I also present evidence that there is a substantial increase in CFO salary level and that both CFOs and COOs hold longer horizon stock option portfolios. These empirical results are broadly consistent with the notion that the Reform is associated with changes in CFO compensation in ways consistent with predictions of agency theory.