پروازهای فانتزی: شرکت جت، حق ویژه مدیر عامل شرکت و بازده سهامداران پایین تر

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.

This paper studies perquisite consumption by executives of major corporations, with a focus on the personal use of company aircraft by CEOs. Perquisites may arise in optimal employment contracts (Fama, 1980), but they may also exist because a firm's governance or incentives are too weak to limit the use of company assets by managers (Jensen and Meckling, 1976). According to the former story, perks may motivate executives to work hard, and they create economic surplus if the company can acquire assets more cheaply than the manager due to purchasing power or tax status. According to the latter view, however, perks reduce firm value directly if managers consume more than desired by shareholders, and indirectly if workers observe managers’ perquisites and react adversely. In this case, perks can catalyze shirking, unethical behavior, or low morale throughout a company. These competing perspectives motivate empirical questions about whether perks lead to increases in company value because they represent an efficient way to pay managers, or alternatively, whether firm performance suffers in the presence of perks because their consumption is symptomatic of waste, poor corporate governance, or unethical management behavior. Until now, no empirical study has tested the association between perks and company performance. This paper conducts a range of tests based upon CEOs’ personal use of company aircraft, as disclosed in annual proxy statements filed pursuant to Securities and Exchange Commission (SEC) regulations. In principle, the paper could examine a wider range of perks such as automobiles, country club memberships, catered lunches, plush office furnishings, and the like, but I focus upon aircraft use for several reasons. First and most importantly, the SEC's reporting rules make data for aircraft use much more reliable than data for other, less expensive perks. The SEC requires perk disclosure only above certain fixed dollar thresholds, and these cutoff levels are generally too high to be triggered by perks other than aircraft. Therefore, empirical tests related to plane use are likely to have higher statistical power than tests related to other perks such as catered lunches or country club memberships, which often remain both undisclosed to shareholders and unobserved by other workers. Second, data presented below indicate that unlike other perks, disclosed CEO personal aircraft use grew explosively in recent years, more than tripling during the 1993 to 2002 sample period. Third, academic and shareholder commentators cite corporate jets far more often than any other perquisites as representative symbols of agency problems within firms. See, for example, Persons (1994, p. 437), Borokhovich et al. (1997, p. 1444), Hall and Liebman (1998, p. 658), and Core and Guay (1999, p. 155). Rajan and Wulf (2005) characterize company planes as “the canonical example of an excessive perk.” A representative example of a shareholder activist's critique of CEOs’ corporate jet use appears in Minow (2001). Finally, company planes have played a central role in some of the most notorious corporate disclosures involving managerial excess, whether prompted by disciplinary hostile takeovers (such as RJR-Nabisco1) or prosecutions for fraud (such as Adelphia Communications2). To understand more clearly the role of perquisites in managerial compensation, the paper's analysis begins with regression models of associations between CEO aircraft use and a range of variables measuring corporate attributes and personal CEO characteristics. The results fail to support the leading financial theories of management perquisites, which appear in classic studies of organizational structure by Jensen and Meckling (1976) and Fama (1980). Jensen and Meckling view perks as appropriations of shareholder wealth by managers, and they conjecture that perk consumption should decline as a manager's fractional ownership of the company's stock increases. Fama treats perks more benignly, as a form of compensation that boards offset through “ex post settling up” reductions in salaries and other pay. To test these theories, I regress the cost of the personal aircraft use by CEOs against their fractional stock ownership and their level of abnormal compensation, measured as the residual from a typical compensation regression model. I do not obtain significant coefficient estimates for either variable. Further regression results indicate that CEOs’ personal characteristics, especially their golfing habits, exhibit especially strong associations with personal aircraft use; if the CEO belongs to a golf club that is located a long distance from headquarters, his personal use of company aircraft increases markedly. In event study analysis, I find that shareholders react negatively when firms first disclose that their CEO has been awarded the aircraft perk, as stock prices fall by an unexpected 1.1% around the time of the relevant SEC filings. While this reduction in market value is significant, it does not appear to anticipate the full extent to which such companies’ stocks underperform the market, on average, in the future. The central result of this study is that the disclosed personal use of company aircraft by CEOs is associated with severe and significant underperformance of their employers’ stocks. Firms that disclose personal aircraft use by the CEO underperform market benchmarks by about 4% or 400 basis points per year, after controlling for a standard range of risk, size, and other factors. This result proves robust to a wide range of alternative performance measures and additional controls. I study firms’ accounting results over time to gain further insight into the inverse relation between CEO aircraft use and company stock performance. This relation suffers much more than can be explained by the direct cost of the aircraft perquisite. After the CEO aircraft perk is first disclosed, the operating performance of firms does not change significantly. However, disclosing companies are more likely to take extraordinary accounting writeoffs and are also more likely to report quarterly earnings per share significantly below analyst estimates. While the findings here about writeoffs, reduced quarterly earnings, and decreasing stock performance are consistent with various theories of managerial shirking in the presence of lavish perks, they may result from a disclosure strategy whereby managers conceal bad news from shareholders until they have acquired access to lucrative fringe benefits. This conjecture represents only one of several disclosure theories that provide intriguing alternate explanations for the findings in the paper. For instance, the growth in CEO aircraft use reported between 1993 and 2002 may be a result not only of greater use of planes by managers, but also of firms’ increasing compliance with SEC disclosure rules in a legal environment that increasingly punishes firms for opaque disclosure. The remainder of the paper is organized as follows. Section 2 presents a brief overview of theories of perquisites developed in finance, economics, and other fields. Section 3 presents a description of the data. Section 4 contains a regression analysis of patterns of CEO's personal aircraft use. Section 5 analyzes the stock market performance of firms that do and do not permit personal use of company planes by their managers, presenting both event study and long-run portfolio evidence. Section 6 concludes.

This paper studies perquisite consumption by CEOs in major companies, focusing on personal use of company aircraft, the most costly and most frequently disclosed managerial fringe benefit. The data indicate that more than 30% of Fortune 500 CEOs in 2002 were permitted to use company planes for personal travel, up from a frequency below 10% a decade earlier. The most striking results in the paper concern the association between CEO perk consumption and company performance. When personal aircraft use by CEOs is first disclosed to shareholders, company stock prices drop by about 1.1%. However, this value loss does not fully anticipate the future poor performance of such companies. Regression analysis indicates that firms permitting CEO aircraft use underperform market benchmarks by about 400 basis points per year, a severe shortfall that cannot be explained simply by the costs of the resources consumed. Regression models of CEO personal aircraft do not show significant associations with compensation, ownership, or monitoring variables as predicted by theory. However, variables that measure personal characteristics of CEOs have marked associations with perk consumption. Especially strong associations appear to exist between personal aircraft use and a CEO's golfing activity, as an indicator variable for long-distance golf club memberships has both strong magnitude and significance. While all of the paper's analysis is based upon companies’ disclosures of the CEO aircraft perk in annual proxy statements, vagueness and loopholes in the disclosure regulations mean that the data is not comprehensive; indeed, disclosure represents, to at least a certain extent, a choice variable for some firms. I find that disclosure is much higher for firms that are targets of shareholder lawsuits for securities fraud, and that disclosure increases in 2001 and 2002, around the time of the Sarbanes-Oxley Act and other regulatory measures that seek to increase the transparency of firms’ SEC filings. These patterns suggest that the rising trend in aircraft perk disclosure over the sample period resulted at least partly from more accurate compliance with the SEC's reporting regulations. After the aircraft perk is first disclosed, firms release greater rates of bad news to shareholders in the form of writeoffs and negative earnings surprises. These patterns are consistent with a hypothesis of strategic disclosure behavior, whereby managers minimize the bad news flowing to the market until after they have secured access to desirable fringe benefits.