Journal
JOURNAL OF FINANCIAL ECONOMICS
Volume 80, Issue 1, Pages 211-242Publisher
ELSEVIER SCIENCE SA
DOI: 10.1016/j.jfineco.2005.05.002
Keywords
executive compensation; perquisites; corporate jets
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This paper studies perquisites of CEOs, focusing on personal use of company planes. For firms that have disclosed this managerial benefit, average shareholder returns underperform market benchmarks by more than 4% annually, a severe gap far exceeding the costs of resources consumed. Around the date of the initial disclosure, firms' stock prices drop by an average of 1.1%. Regression analysis finds no significant associations between CEOs' perquisites and their compensation or percentage ownership, but variables related to personal CEO characteristics, especially long-distance golf club memberships, have significant explanatory power for personal aircraft use. (c) 2005 Elsevier B.V. All rights reserved.
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