Henderson, M. Todd
October 2007
Northwestern University Law Review;Fall2007, Vol. 101 Issue 4, p1543
Academic Journal
The article examines how chief executive officers (CEO) are compensated during bankruptcy. The compensation practices in firms where agency costs are dramatically reduced are discussed. Theoretical predictions about the role agency costs play in determining how and how much executives are compensated are examined. A study suggested that creditors in corporate reorganizations had significant incentives to bargain over CEO compensation. Findings also showed that sophisticated investors had little influence in reducing CEO compensation or changing the compensation structure when a firm faces financial distress.


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