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Executive Compensation and Deployment of Corporate Resources: Evidence from Working Capital

Author

Listed:
  • Aktas, Nihat
  • Croci, Ettore
  • Ozbas, Oguzhan
  • Petmezas, Dimitris

Abstract

Firms provide compensation incentives to executives, primarily in the form of bonus payments, to alleviate slack in the deployment of corporate resources to working capital. Financially constrained firms are heavy users of working capital incentives. So are firms that are less exposed to external takeover threats. Among the different components of working capital, inventories and payables are the main drivers of executive bonuses. Overall, our evidence supports the optimal contracting view of bonus payments in executive compensation.

Suggested Citation

  • Aktas, Nihat & Croci, Ettore & Ozbas, Oguzhan & Petmezas, Dimitris, 2021. "Executive Compensation and Deployment of Corporate Resources: Evidence from Working Capital," Review of Corporate Finance, now publishers, vol. 1(1-2), pages 43-80, April.
    • Handle: RePEc:now:jnlrcf:114.00000002
    DOI: 10.1561/114.00000002
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    Cited by:

    1. Ahmad, Muhammad Farooq & Aktas, Nihat & Croci, Ettore, 2023. "Climate risk and deployment of corporate resources to working capital," Economics Letters, Elsevier, vol. 224(C).

    More about this item

    Keywords

    Working capital; bonus payment; executive compensation; financial constraint;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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