CEO Incentives, Cash Flow, and Investment
研究CEO激励如何影响投资对现金流的敏感度，发现增强激励主要减少自由现金流的过度投资，而非加剧融资约束。
We estimate the impact of chief executive officer (CEO) incentives on the sensitivity of investment to cash flow during a period of strong economic growth. Our measure of the alignment of managers’ and shareholders’ interests, pay-performance sensitivity (PPS), incorporates both stock and stock option holdings. Contrary to prior studies, we find that the dominant effect of increasing alignment is to reduce the overinvestment of free cash flow. We find no evidence that incentives exacerbate the severity of financial constraints. We find some evidence that PPS helps reduce the underinvestment of cash flow due to managerial shirking.