Professor Ronald Masulis, Australian School of Business, University of New South Wales
We find a large body of evidence that reputation incentives of independent directors vary across firms and significantly influence CEO compensation contracts and the degree of managerial discretion in reported earnings. When more independent directors rank the directorship highly, these firms are associated with greater equity based CEO compensation, and higher CEO pay-sensitivity to performance and volatility. Moreover, boards with greater reputation incentives are also associated with lower levels of earnings management and fewer instances of earnings restatements. These results are unchanged when accounting for potential endogeneity under multiple approaches. The results are particularly strong when we focus on the compensation or audit committee incentives. Our evidence supports the conclusion that director reputation significantly affects important contracting and continuing monitoring activities of independent directors.
Ron Masulis is the Scientia Professor of Finance and the Macquarie Group Chair of Financial Services at the Australian School of Business, University of New South Wales. Ron received his MBA and PhD from the University of Chicago. He is a recognised authority in the areas of empirical corporate finance and corporate governance.
His published research spans investment banking, financial institutions, market microstructure, international finance, private equity, law and economics and corporate governance topics such as mergers and acquisitions, boards of directors, executive compensation, ownership structure and business groups. Among financial economists worldwide, he has one of the highest sustained rates of top tier publications and frequency of citations across a range of top journals including the Journal of Financial Economics, Journal of Finance, Review of Financial Studies, Journal of Accounting and Economics and Journal of Law and Economics.
Ron has won a number of top research awards, including five Journal of Financial Economics All Star Paper Awards. He has served on the Board of Directors/Executive Committee of the American Finance Association, the Western Finance Association and the Financial Management Association (FMA). He currently serves as the FMA’s Vice President of Global Services, the board of directors of the Financial Intermediation Research Society (FIRS), an advisory editor of Financial Management, an associate editor of the Journal of Financial and Quantitative Analysis and the Pacific-Basin Finance Journal, and is past associate editor of all three top finance journals.