This week’s Conversations with Goodman podcast features Prof. Kareen Brown talking about her research on severance pay packages.

Brown, an assistant professor in Goodman’s accounting department, describes a severance pay package as an agreement between a company and its CEO on the first day of work to articulate how much money in cash or stock would be paid upon the CEO leaving without cause.

Severance pay packages are often perceived by the public as payment for failure, but after researching this topic extensively, Prof. Brown found that CEOs who have a severance pay package commit fraud less often than those who do not.

Prof. Brown’s research findings also show that CEOs who have a severance pay package are more likely to take risks, but she emphasizes that the purpose of executive compensation packages are to make the CEO comfortable enough in their job to do what the shareholder would want them to do.

Prof. Brown explains that there needs to be a clear link between pay and performance, and that earnings management can be destructive to a firm.

This is the latest in the Conversations with Goodman series which is produced by the Goodman Marketing, Communications and Alumni Relations team and features guests from the Goodman community.