Current practice of management cash compensation is based on financial targets. The financial targets for a year may be above, equal to, or below the previous year's publicly available performance measures based in part on the prevailing economic conditions. Accordingly, during economic downturn, a flat relation between changes in management cash compensation and simple changes in corporate performance, like annual profits or return on equity, is predicted, while during economic growth, a positive relation is predicted between changes of management cash compensation and corporate performance measures. The evidence in this study is based on the period 1987‐95. Pooled, cross‐sectional results are consistent with the propositions of no relation between changes in management cash compensation and changes in measures of corporate performance during periods of economic downturn and significant positive relation during economic growth. Further sensitivity analysis of these results with respect to market‐based performance measures, size, and industry classifications confirm the main results.

Current practice of management cash compensation is based on financial targets. The financial targets for a year may be above, equal to, or below the previous year's publicly available performance measures based in part on the prevailing economic conditions. Accordingly, during economic downturn, a flat relation between changes in management cash compensation and simple changes in corporate performance, like annual profits or return on equity, is predicted, while during economic growth, a positive relation is predicted between changes of management cash compensation and corporate performance measures. The evidence in this study is based on the period 1987-95. Pooled, cross-sectional results are consistent with the propositions of no relation between changes in management cash compensation and changes in measures of corporate performance during periods of economic downturn and significant positive relation during economic growth. Further sensitivity analysis of these results with respect to market-based performance measures, size, and industry classifications confirm the main results.

The objective of this study is to provide evidence on how technological innovation conditions underlying the firm's investments drive earnings growth and, hence, market value of equity. Technologies develop and flourish or die out through the combined investment decisions of those firms doing the inventing, and those firms that adopt those inventions, and thereby help to spread (or diffuse) the innovations into wider use. Hence, technology is important for the investment decisions of all firms, regardless of whether they patent. We focus on three aggregate measures of technological innovation conditions: the success rate of past technological investments, technology complexity, and the technology development period. We use the interactions between each of these three conditions with earnings to capture the combined effect on market value of a firm's technological innovation environment. Our sample comprises 12,594 U.S. firm years for the period 1990–2000 including firms actively producing new technologies and firms that adopt technologies for their processes and products. Our primary and additional tests suggest that the interactions capture value-relevant information not reflected in commonly used variables including industry, research and development, sales, general, and administration expenses, risk, and growth. We also triangulate our results by providing evidence that aggregate technological innovation conditions predict future earnings and are, hence, instrumental in the earnings-generation process. This paper extends the valuation literature by (1) developing a generalizable framework that explains how technological innovation conditions link to future earnings and therefore map into the market value of equity; (2) developing aggregate measures of technological innovation conditions that are relevant for estimating future earnings and value for all firms; and (3) providing detailed empirical evidence on the relation between these aggregate measures and the market value of equity and earnings for all firms not just those that patent.

The gender pay gap generates significant political and social debate. This study contributes to this discussion by examining if a gender pay gap exists at the highest level of corporate management, the CEOs. While previous studies have documented a gender pay gap for most levels of executives the findings with respect to CEOs are conflicting. In this paper we focus only on CEO's as it is the most homogenous of executive roles and does not require us to assume that executives with similar titles undertake identical roles. Our evidence is based on 291 US firm-years for the period of 1998–2010. We do not find any association between CEO pay and gender using both the total sample and a sample matched using propensity scores to control for firm characteristics. These insignificant results hold for total pay, salary and bonuses, and for different matching procedures and econometric specifications. Our results therefore indicate that women who rise through the “glass ceiling” to the level of CEO are remunerated at similar levels to their male counterparts.

We investigate whether qualified and experienced directors are willing to join firms following the revelation of financial fraud. Specifically, we focus on directors with prior board experience and accounting and legal experts. We find that, notwithstanding the tarnished reputation of fraudulent firms and a higher workload, qualified and experienced directors join the boards of such firms. Subsequent to joining fraudulent firms, directors are rewarded with additional future board seats and benefit from higher compensation. We rule out alternative explanations and verify the robustness of the results by performing a variety of tests, including propensity score matching and difference-in-differences analysis.