Abstract
This Article reports the results of an empirical study that suggest that the current economic crisis has changed managerial behavior in the United States in a way that may impede economic recovery. The study finds a strong, statistically significant, and economically meaningful, positive correlation between CEO total annual compensation and corporate cash holdings during the economic crisis in the years 2008-2010. Such a significant correlation did not exist in prior years. The empirical findings suggest that high CEO compensation increases managerial risk-aversion in times of crisis. The Article considers several explanations for these empirical findings, some of which imply a market failure. The study has implications for the discussion on managerial pay arrangements and the implementation of the Dodd-Frank Act concerning say on pay.
How to Cite
55 Ariz. L. Rev. 105 (2013)
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