Executive Compensation: New vs. Old Economy and the Impact of NASDAQ Crash and Sarbanes Oxley Act

38 Pages Posted: 1 Jun 2008 Last revised: 25 Sep 2013

See all articles by João Paulo Vieito

João Paulo Vieito

Scholl of Business Studies - Polytechnic Instituto of Viana do Castelo

Antonio Melo Cerqueira

Universidade do Porto - Faculdade de Economia (FEP)

Elisio Brandao

Universidade do Porto - Faculdade de Economia (FEP)

Walayet A. Khan

University of Evansville

Abstract

This is a new study which examines whether the determinants and the forms of compensation in new versus old economy US firms are the same over time and if the structure of compensation for executives in both groups changes after the NASDAQ crash and the enactment of the Sarbanes-Oxley act.

The results reveal that the new economy executives receive, on average, much more than the executives from the old economy, primarily due to stock options, but in the last few years the difference in compensation between the executives of both groups is decreasing.

We find that the NASDAQ crash and the Sarbanes-Oxley act had a significant impact upon the structure of the components of executive compensation in both new and old economy firms. Firms in both groups have reduced the use of stock options and have instead increased the use of bonuses and restricted stocks.

We also find that the factors that explain executive compensation in new and old economy firms are generally different, and in the case of the variables that are the same, like firm size component, the intensity of the factors is different.

Keywords: Executive Compensation, New economy, Old Economy, Nasdaq Crash, Sarbanes

JEL Classification: G3, J3

Suggested Citation

Vieito, João Paulo and Cerqueira, Antonio Melo and Brandão, Elísio Fernando Moreira and Khan, Walayet A., Executive Compensation: New vs. Old Economy and the Impact of NASDAQ Crash and Sarbanes Oxley Act. 21st Australasian Finance and Banking Conference 2008 Paper, Available at SSRN: https://ssrn.com/abstract=1139544 or http://dx.doi.org/10.2139/ssrn.1139544

João Paulo Vieito (Contact Author)

Scholl of Business Studies - Polytechnic Instituto of Viana do Castelo ( email )

Avenida Miguel Dantas
Valença, 4930
Portugal

Antonio Melo Cerqueira

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Elísio Fernando Moreira Brandão

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Roberto Frias
s/n
Porto, 4200-464
Portugal

Walayet A. Khan

University of Evansville ( email )

School of Business Admin 1800 Lincoln Avenue
Evansville, IN 47722
United States
812-479-2869 (Phone)
812-479-2872 (Fax)

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