TECHNISCHE UNIVERSITÄT MÜNCHEN Lehrstuhl für Betriebswirtschaftslehre – Controlling Three Essays on Top Management Team Compensation Tim Kettenring Vollständiger Abdruck der von der Fakultät für Wirtschaftswissenschaften der Technischen Universität München zur Erlangung des akademischen Grades eines Doktors der Wirtschaftswissenschaften (Dr. rer. pol.) genehmigten Dissertation. Vorsitzender: Univ.-Prof. Dr. Christoph Kaserer Prüfer der Dissertation: 1. Univ.-Prof. Dr. Gunther Friedl 2. Univ.-Prof. Dr. Anja Tuschke, Ludwig-Maximilian- Universität München Die Dissertation wurde am 21. Mai 2012 bei der Technischen Universität München eingereicht und durch die Fakultät für Wirtschaftswissenschaften am 15. Juli 2012 angenommen. TABLE OF CONTENTS – OVERVIEW I TABLE OF CONTENTS – OVERVIEW TABLE OF CONTENTS – OVERVIEW TABLE OF CONTENTS – OVERVIEW ................................................................................... I TABLE OF CONTENTS – DETAILS ..................................................................................... II LIST OF FIGURES .................................................................................................................. IV LIST OF TABLES .................................................................................................................... V LIST OF ABBREVIATIONS .................................................................................................. VI 1 INTRODUCTION .................................................................................................................. 1 2 ESSAY 1: TOURNAMENTS, TOP MANAGEMENT TEAM COMPENSATION, AND THE IMPACT OF COMPLEXITY – TWO SIDES OF ONE STORY.................................................................................................................. 13 3 ESSAY 2: TOP MANAGEMENT TEAM PAY, INCENTIVES AND FIRM PERFORMANCE – A COMPREHENSIVE ANALYSIS .................................................. 50 4 ESSAY 3: ANTECEDENTS AND CONSEQUENCES OF THE CFO’S ROLE IN THE TOP MANAGEMENT TEAM .............................................................................. 84 5 CONCLUSION .................................................................................................................. 125 TABLE OF CONTENTS – DETAILS II TABLE OF CONTENTS – DETAILS TABLE OF CONTENTS – DETAILS TABLE OF CONTENTS – OVERVIEW ................................................................................... I TABLE OF CONTENTS – DETAILS ..................................................................................... II LIST OF FIGURES .................................................................................................................. IV LIST OF TABLES .................................................................................................................... V LIST OF ABBREVIATIONS .................................................................................................. VI 1 INTRODUCTION .................................................................................................................. 1 1.1 Motivation ................................................................................................................... 1 1.2 Research overview and positioning of this dissertation .............................................. 3 1.3 Structure, key findings, and contribution .................................................................. 11 2 ESSAY 1: TOURNAMENTS, TOP MANAGEMENT TEAM COMPENSATION, AND THE IMPACT OF COMPLEXITY – TWO SIDES OF ONE STORY.................................................................................................................. 13 2.1 Introduction ............................................................................................................... 14 2.2 Conceptual Development .......................................................................................... 16 2.2.1 The basic tournament model and its relation to complexity ............................. 16 2.2.2 Tournament model extensions and their relation to complexity ...................... 18 2.2.3 Hypotheses ........................................................................................................ 20 2.3 Methods ..................................................................................................................... 25 2.3.1 Data and Sample ............................................................................................... 25 2.3.2 Measures ........................................................................................................... 26 2.3.3 Analyses ............................................................................................................ 29 2.4 Results ....................................................................................................................... 30 2.4.1 Summary Statistics ........................................................................................... 30 2.4.2 Hypotheses Tests .............................................................................................. 33 2.5 Discussion .................................................................................................................. 36 2.6 Concluding Remarks ................................................................................................. 40 2.7 References ................................................................................................................. 42 TABLE OF CONTENTS – DETAILS III 3 ESSAY 2: TOP MANAGEMENT TEAM PAY, INCENTIVES AND FIRM PERFORMANCE – A COMPREHENSIVE ANALYSIS .................................................. 50 3.1 Introduction ............................................................................................................... 51 3.2 Theory and Hypotheses ............................................................................................. 53 3.3 Methods ..................................................................................................................... 60 3.3.1 Data and Sample ............................................................................................... 60 3.3.2 Measures ........................................................................................................... 61 3.3.3 Analyses ............................................................................................................ 64 3.4 Results ....................................................................................................................... 66 3.4.1 Summary Statistics ........................................................................................... 66 3.4.2 Hypotheses Tests .............................................................................................. 68 3.5 Discussion .................................................................................................................. 72 3.6 Concluding Remarks ................................................................................................. 76 3.7 References ................................................................................................................. 77 4 ESSAY 3: ANTECEDENTS AND CONSEQUENCES OF THE CFO’S ROLE IN THE TOP MANAGEMENT TEAM .............................................................................. 84 4.1 Introduction ............................................................................................................... 85 4.2 Theory and Hypotheses ............................................................................................. 87 4.2.1 Antecedents of CFO’s role ............................................................................... 87 4.2.2 Consequences of CFO’s role on firm performance .......................................... 95 4.3 Methods ..................................................................................................................... 96 4.3.1 Data and Sample ............................................................................................... 96 4.3.2 Measures ........................................................................................................... 97 4.3.3 Analyses .......................................................................................................... 100 4.4 Results ..................................................................................................................... 101 4.4.1 Summary Statistics ......................................................................................... 101 4.4.2 Hypotheses Tests ............................................................................................ 104 4.5 Discussion ................................................................................................................ 110 4.6 Concluding Remarks ............................................................................................... 115 4.7 References ............................................................................................................... 117 5 CONCLUSION .................................................................................................................. 125 REFERENCES (INTRODUCTION & CONCLUSION) ...................................................... 127 LIST OF FIGURES IV LIST OF FIGURES LIST OF FIGURES 1 INTRODUCTION Figure 1: Classification of Research on Top Executive Compensation ..................................... 4 Figure 2: Positioning of the essays of this dissertation ...........................................................