Natasha Burns

Does Say on Pay Matter? Evidence from Say-on-Pay Proposals in the United States

We investigate the effect of say-on-pay (SOP) proposals on changes in executive and director compensation. Relative to non-SOP firms, SOP firms’ total compensation to CEOs does not significantly change after the proposal. Although the total compensation does not change, the mix of compensation does change – companies move away from using cash compensation toward more incentive compensation, offsetting the reduction in bonus. Further, the mix of compensation of non-CEO executives changes similarly to that of CEOs. Compensation to directors of SOP firms increases significantly less than non-SOP firms’. Firms whose CEOs are well compensated, especially with cash-based compensation, are most likely to receive a proposal.

CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences

Using a cross-country sample, we examine the chief executive officer (CEO) tournament structure (measured alternatively as the ratio and the difference of pay between the CEO and other top executives within a firm). We find the tournament structure to vary systematically with firm and country cultural characteristics. In particular, firm size and the cultural values of power distance, fair income differences, and competition are significantly associated with variations in tournament structures. We also establish support for the primary implication of tournament theory in that tournament structure tends to be positively related to firm value, even after controlling for endogeneity.

The Role of Cross-Listed Stock as an Acquisition Currency: Evidence from Takeovers of U.S. Firms

This paper examines how cross-border acquisitions are financed. Acquisitions of U.S. targets by cross-listed bidders are compared against those of U.S. and non-cross-listed bidders. By cross-listing, a foreign firm reduces its cost of paying for acquisitions with equity by enhancing the rights of its minority investors and by decreasing barriers to ownership of its shares by U.S. investors. Cross-listed firms using equity pay on average 10% less than non-cross-listed firms paying with cash. However, they use equity less often than U.S. firms. Cross-listed firms from countries with poorer investor protection pay a higher premium when using equity indicating that U.S. shareholders require compensation for opting into corporate governance environments with poorer investor protection.

Political Spending and Shareholder Wealth: The Effect of the U.S. Supreme Court Ruling in Citizens United

We examine the impact of the Citizens United decision on firm value. While the value of U.S. firms do not respond significantly to the Citizens United decision on average, we find evidence that firms in industries subject to more extensive regulation react significantly and positively to the announcement. We also find evidence consistent with Justice John Paul Stevens’ argument that the Court decision will affect state laws. Specifically, our results indicate that firms that are headquartered in states with more stringent limits on political spending by corporations respond positively to the announcement.

CEO Compensation and the Sale of Private Firms

We analyze the relation of private firms’ CEO compensation with the probability of sale of a firm and its valuation at the time of the sale. Specifically, we study whether equity-based remuneration is consistent with compensating the CEO for effort related to selling the private firm, or with compensating for the illiquidity of the equity-based compensation for private firms. Using a sample of large private firms with public filings, we find that CEOs of IPO and acquired private firms have higher total and equity-based compensation than CEOs of firms that remain private. We also show that CEO compensation is positively related to the valuation premium of IPOs versus acquired firms.