Ford, Melinda
(2019)
The Effects of Reciprocity and Cognitive Dissonance on Board Members' Clawback Decisions.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
My dissertation is composed of two studies, an experiment and a survey. The experiment examines whether the norm of reciprocity causes board members to make decisions that favor those who nominated them to the board. I hypothesize that board members are more likely to bias decisions in favor of the CEO at the expense of shareholders when the CEO nominated them for the board than when they were nominated by shareholders. I also examine whether this reciprocal behavior is greater when it is easier for the board member to rationalize helping the CEO. I test these predictions using an experiment in which the board member recommends the amount of incentive compensation to claw back from the CEO after an earnings restatement. I do not find my hypothesized results using board members’ own decisions because most board members report they would claw back the full amount regardless of who nominated them. I also use an approach common in psychology literature and examine board members’ beliefs about other board members’ clawback decisions, and find results consistent with my reciprocity hypothesis. Specifically, board members believe other board members will claw back less compensation from the CEO when they were nominated by the CEO than they do when nominated by shareholders. I find mixed evidence regarding whether board members claw back less when it is easier to rationalize helping the CEO. My survey investigates board members’ clawback decision further by examining board members’ perceptions regarding the decision to claw back compensation from a CEO. The findings of these studies inform the SEC’s current debates regarding whether to allow shareholders to nominate board members and how much discretion board members should have over clawback decisions.
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Details
| Item Type: |
University of Pittsburgh ETD
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| Status: |
Unpublished |
| Creators/Authors: |
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| ETD Committee: |
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| Date: |
6 August 2019 |
| Date Type: |
Publication |
| Defense Date: |
24 April 2019 |
| Approval Date: |
6 August 2019 |
| Submission Date: |
13 June 2019 |
| Access Restriction: |
No restriction; Release the ETD for access worldwide immediately. |
| Number of Pages: |
113 |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Joseph M. Katz Graduate School of Business > Business Administration |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
clawback, reciprocity, board members, claw back, cognitive dissonance, shareholder nomination, nominating party, accounting, corporate governance, discretion |
| Date Deposited: |
06 Aug 2019 16:42 |
| Last Modified: |
06 Aug 2019 16:42 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/36932 |
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