Incentives, downsizing, and value creation at general dynamics,

Dial, Jay; Murphy, Kevin J.

doi:10.1016/0304-405x(94)00803-9

Cited by 214 publications

(104 citation statements)

References 9 publications

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“…In the pre-2001 period, the U.S. defense industry was broadly in a consolidation and contraction phase, transitioning away from the Cold War mind-set of the prior decades (e.g., Dial and Murphy 1995, Anand and Singh 1997, Goyal et al 2002. The events of September 2001 caused a significant reset in the industry's focus: the Afghanistan and Iraq wars had their genesis in this event, pushing to the forefront of consideration those products and technologies that would be a better fit with the new security and counterterrorism orientation of the post-2001 environment.…”

Section: Methods and Resultsmentioning

confidence: 99%

Organizational Constraints to Adaptation: Intrafirm Asymmetry in the Locus of Coordination

Aggarwal

2015

Organization Science

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W e assemble a panel data set of firms in the U.S. defense industry between 1996 and 2006 to examine the drivers of heterogeneous incumbent firm adaptation following the industry-wide demand shock of September 11, 2001. This shock entailed not only an increase in aggregate demand but, more importantly, a shift in the relative attractiveness of individual product areas, resulting in the need for firms to reshuffle their product portfolios in response to changing demand conditions. The exogenous nature of the shock allows us to empirically identify the effect of preshock interdependence structures on postshock adaptation outcomes. We find that the locus of coordination inside a firm can explain differential postshock adaptation performance: because interdependencies spanning organizational boundaries are more difficult to manage than those contained within such boundaries, coordination across product areas creates greater adaptation challenges compared with coordination within product areas. We further investigate the moderating effects of product complementarity and organizational grouping, finding results consistent with our hypothesized mechanisms. As one of the first studies to empirically link a firm's locus of coordination with its adaptation performance, this study contributes to our understanding of the role of interdependence and organization design in dynamic environments.

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Section: Methods and Resultsmentioning

confidence: 99%

Organizational Constraints to Adaptation: Intrafirm Asymmetry in the Locus of Coordination

Aggarwal

2015

Organization Science

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“…More recent studies investigate the correlation of stock and option holdings with a variety of outcomes. Equity incentives have been associated with better operating performance (Core and Larcker, 2002), more and better acquisitions (Datta, Iskandar-Datta, and Raman, 2001;Cai and Vijh, 2007), larger restructurings and layo¤s (Dial and Murphy, 1995;Brookman, Chang, and Rennie, 2007), and more voluntary liquidations (Mehran, Nogler, and Schwartz, 1998). Options are also linked to lower dividends (Lambert, Lanen, and Larcker, 1989) and to a shift from dividends to share repurchases (Fenn and Liang, 2001;Kahle, 2002), likely because options are not usually dividend protected.…”

Section: The E¤ects Of Pay On Policies Pro…tability and Executive Rmentioning

confidence: 99%

Executive Compensation: A Survey of Theory and Evidence

Edmans¹,

Gabaix²,

Jenter³

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public firms to private and non-U.S. firms. We then critically analyze three non-exclusive explanations for what drives executive pay -shareholder value maximization by boards, rent extraction by executives, and institutional factors such as regulation, taxation, and accounting policy. We confront each hypothesis with the evidence. While shareholder value maximization is consistent with many practices that initially seem inefficient, no single explanation can account for all facts and historical trends; we highlight major gaps for future research. We discuss evidence on the effects of executive pay, highlighting recent identification strategies, and suggest policy implications grounded in theoretical and empirical research. Our survey has two main goals. First, we aim to tightly link the theoretical literature to the empirical evidence, and combine the insights contributed by all three views on the drivers of pay. Second, we aim to provide a user-friendly guide to executive compensation, presenting shareholder value theories using a simple unifying model, and discussing the challenges and methodological issues with empirical research. JEL-Codes: D310, D860, G340, M120. Terms of use: Documents in

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“…By contrast, Lehn and Poulsen [6], Fox and Marcus [23], and Dial and Murphy [24] suggested the encouraging approach that a firm could change management's action to be more in favor of stockholders by increasing the shares held by management.…”

Section: Agency Costsmentioning

confidence: 99%