The question whether the use of an asset will be terminated before its physical life expires is of interest to financial managers. In other words, purchasing an asset does not…
Abstract
The question whether the use of an asset will be terminated before its physical life expires is of interest to financial managers. In other words, purchasing an asset does not necessitate its use until the end of its physical life. An asset might be terminated because it is inefficient to continue operating, or because it can be replaced. Thus, in a single cycle problem, the objective is to determine how long an asset should be employed before termination. In a replacement problem, the focus is on determining how long the asset should be held before being replaced with a similar one.
Alexandros P. Prezas, Murat Tarimcilar and Gopala K. Vasudevan
Our study examines CEO compensation for firms that announce layoffs during the 1993–2001 period. We find that overall there is a large increase in CEO equity-based compensation in…
Abstract
Our study examines CEO compensation for firms that announce layoffs during the 1993–2001 period. We find that overall there is a large increase in CEO equity-based compensation in the year prior to and the year of the downsizing. Our sample of downsizing firms has small improvements in operating performance following the announcement. However, these performance improvements manifest themselves in the low but not the high equity-based compensation firms. We find that the announcement period returns are higher for downsizing firms that are larger, hire a new CEO in the year prior to the downsizing, have higher leverage, and better operating performance.