Research Spotlight

Effect of Derivative Gains/Losses on CEO Compensation

Across the world there are serious concerns about excessive CEO pay, and CEO pay not being linked to performance. When dealing with complex financial instruments such as derivatives, CEOs are likely to attribute gains to their efforts and insights and thereby claim bonuses. On the other hand, when there is a loss, CEOs conveniently attribute it to complicated fair value accounting rules and get away with it.
 
Hariom Manchiraju, Assistant Professor in the Accounting area at the Indian School of Business, and his co-authors examine whether derivative gains and losses affect the compensation of a CEO. Read More