CEO Dividend Protection
Journal article, Peer reviewed
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Original versionJournal of Empirical Finance, 2018, 45(1), 194-211 10.1016/j.jempfin.2017.10.005
This paper studies CEO dividend protection, an important element in the executive compensation package that protect CEOs’ compensation from stock price drops due to dividend payments. First, I show that there is large variation among S&P 500 firms in whether they provide dividend protections to their CEOs or not. Second, CEO dividend protection is positively associated with firms’ dividend payout. Third, a time series analysis suggests that dividend protection is implemented prior to a firm increasing dividends. Finally, there is no evidence suggesting that CEO dividend protection affects other corporate policies, such as cash holdings and investment.
The accepted and peer reviewed manuscript to the article