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The Incentives of Compensation Consultants and CEO Pay
Brian D. Cadman University of Utah - David Eccles School of Business Mary Ellen Carter Boston College - Department of Accounting Stephen A. Hillegeist INSEAD Journal of Accounting and Economics, Forthcoming Abstract: We examine whether compensation consultants' potential cross-selling incentives explain more lucrative CEO pay packages using 755 firms from the S&P 1500 for 2006. Critics allege that these incentives lead consultants to bias their advice to secure greater revenues from their clients (Waxman, 2007). Among firms that retain consultants, we are unable to find widespread evidence of higher levels of pay or lower pay-performance sensitivities for clients of consultants with potentially greater conflicts of interest. Overall, we do not find evidence suggesting that potential conflicts of interest between the firm and its consultant are a primary driver of excessive CEO pay.
Keywords: Executive Compensation, Compensation Consultants JEL Classifications: J33, G34 Accepted Paper SeriesDate posted: March 13, 2008 ; Last revised: July 08, 2009Suggested CitationContact Information
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