Dynamics influences of Tobin’s Q and CEO compensation on US stocks

Dynamics influences of Tobin’s Q and CEO compensation on US stocks PurposeThis paper aims to empirically explore the influences of Tobin’s Q and CEO compensation of 249 US companies on their stock returns.Design/methodology/approachHeterogeneous panel data for these companies over 2004-2012 are used invoking panel cointegration techniques.FindingsPanel unit root tests and Pedroni cointegration tests confirm nonstationarity of each variable and cointegration among the above three variables. The panel vector error-correction model (VECM) estimates reveal long-run convergence with tepid adjustment. The short-run net interactive feedback effects are positive. The panel generalized method of moments estimates lend further support to the panel VECM inferences.Originality/valueThe topic is unique and the existing literature on this topic is scant. Relatively new econometric techniques have been applied for estimation using panel data. The results are quite insightful, in the authors’ view. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economic Policy Emerald Publishing

Dynamics influences of Tobin’s Q and CEO compensation on US stocks

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Publisher
Emerald Group Publishing Limited
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1757-6385
D.O.I.
10.1108/JFEP-03-2017-0017
Publisher site
See Article on Publisher Site

Abstract

PurposeThis paper aims to empirically explore the influences of Tobin’s Q and CEO compensation of 249 US companies on their stock returns.Design/methodology/approachHeterogeneous panel data for these companies over 2004-2012 are used invoking panel cointegration techniques.FindingsPanel unit root tests and Pedroni cointegration tests confirm nonstationarity of each variable and cointegration among the above three variables. The panel vector error-correction model (VECM) estimates reveal long-run convergence with tepid adjustment. The short-run net interactive feedback effects are positive. The panel generalized method of moments estimates lend further support to the panel VECM inferences.Originality/valueThe topic is unique and the existing literature on this topic is scant. Relatively new econometric techniques have been applied for estimation using panel data. The results are quite insightful, in the authors’ view.

Journal

Journal of Financial Economic PolicyEmerald Publishing

Published: Apr 3, 2018

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