Top Management Ties with Board Members: How They Affect Pay-Performance Sensitivity and IPO Performance

Top Management Ties with Board Members: How They Affect Pay-Performance Sensitivity and IPO Performance

Salim Chahine, Marc Goergen

Series number :

Serial Number: 
419/2014

Date posted :

April 01 2014

Last revised :

May 02 2014
SSRN Suggested citation Download this paper Open PDF Share

Keywords

  • initial public offerings (IPOs) • 
  • family ties • 
  • social ties • 
  • pay-performance sensitivity • 
  • homophily
This paper is the first study on the effects of pay-performance sensitivity (PPS) on the performance of initial public offerings (IPOs) in the presence of social ties and family ties of the top managers with board members. We find that both social ties and family ties increase PPS. In turn, PPS improves IPO performance.
More importantly, greater PPS increases the positive effect of social ties on IPO performance whereas it reduces the negative effect of family ties.

Authors