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Top management ties with board members: How they affect pay–performance sensitivity and IPO performance

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  • Chahine, Salim
  • Goergen, Marc

Abstract

This paper is the first study on the effects of pay–performance sensitivity (PPS) on the performance of initial public offerings (IPOs) in the presence of social ties and family ties of the top managers with board members. We find that both social ties and family ties increase PPS. In turn, PPS improves IPO performance. More importantly, greater PPS increases the positive effect of social ties on IPO performance whereas it reduces the negative effect of family ties.

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  • Chahine, Salim & Goergen, Marc, 2014. "Top management ties with board members: How they affect pay–performance sensitivity and IPO performance," Journal of Corporate Finance, Elsevier, vol. 27(C), pages 99-115.
    • Handle: RePEc:eee:corfin:v:27:y:2014:i:c:p:99-115
    DOI: 10.1016/j.jcorpfin.2014.04.007
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    More about this item

    Keywords

    Initial public offerings (IPOs); Family ties; Social ties; Pay–performance sensitivity; Homophily;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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