This study obtains the CEO stock-based compensation and total compensation data from Standard & Poor’s ExecuComp database and collects the firm’s RoE, debt ratio, and total assets from Standard & Poor’s Compustat database. Table 2 summarizes the definitions of the dependent/independent variables selected for this study, and Table 3 presents the descriptive statistics of these variables. From Table 3, we find the mean and median of RoE in Panel A are around 17 per cent and 16 per cent, respectively, and this implies that the distribution of RoE is likely to be symmetric. The ratio of stock-based components to total compensation