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Executive compensation based on asset values

Author

Listed:
  • Hans Bystrom

    (Lund University)

Abstract

This paper describes how credit default swaps could be employed to create performance based executive compensation portfolios that reflect the value of a firm's debt as well as equity; i.e. the total value of all a firm's assets. We define so-called Asset Value Unit (AVU) compensation portfolios that work both for executive- and non-executive pay schemes in financial as well as non-financial firms.

Suggested Citation

  • Hans Bystrom, 2012. "Executive compensation based on asset values," Economics Bulletin, AccessEcon, vol. 32(2), pages 1504-1508.
    • Handle: RePEc:ebl:ecbull:eb-12-00074
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2012/Volume32/EB-12-V32-I2-P145.pdf
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    References listed on IDEAS

    as
    1. Patrick Bolton & Hamid Mehran & Joel Shapiro, 2015. "Executive Compensation and Risk Taking," Review of Finance, European Finance Association, vol. 19(6), pages 2139-2181.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Hull, John & Predescu, Mirela & White, Alan, 2004. "The relationship between credit default swap spreads, bond yields, and credit rating announcements," Journal of Banking & Finance, Elsevier, vol. 28(11), pages 2789-2811, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    executive pay; executive compensation; stock; credit default swap;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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