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Does CEO Power Affect the Association Between CEO Compensation and Tangible Assets Impairments?

Kin-Wai Lee

https://orcid.org/0000-0003-4092-3865

Nanyang Business School, Nanyang Technological University Singapore, 50 Nanyang Avenue, Singapore 639798, Singapore

E-mail Address: akwlee@ntu.edu.sg

Corresponding author.

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Cheng-Few Lee

Rutgers University, Room 5188, 100 Rockefeller Road Piscataway, NJ 08854, United States of America

E-mail Address: cflee@business.rutgers.edu

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, and

Gillian Hian-Heng Yeo

Nanyang Business School, Nanyang Technological University Singapore, 50 Nanyang Avenue, Singapore 639798, Singapore

E-mail Address: ahhyeo@ntu.edu.sg

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https://doi.org/10.1142/S0219091521500053Cited by:1 (Source: Crossref)

Abstract

This paper examines the association between CEO compensation and tangible long-lived assets impairment. We find that the level of CEO compensation is negatively associated with the tangible long-lived assets impairment charges. We also document that in firms with CEOs who have more decision-making power, the negative association between CEO compensation and tangible long-lived assets impairment charges is mitigated. Specifically, the negative association between CEO compensation and tangible long-lived assets impairment charges is less pronounced (1) when CEO chairs the board, (2) when CEO is the founder of the firm, (3) when the CEO is involved in the director selection process, and (4) when overall board independence is low.

Keywords:

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