Shareholder Rights, Boards, and CEO Compensation
Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute
Review of Finance, Vol. 13, Issue 1, pp. 81-113, 2009
I analyze the role of executive compensation in corporate governance. As proxies for corporate governance, I use board size, board independence, CEO-chair duality, institutional ownership concentration, CEO tenure, and an index of shareholder rights. The results from a broad cross-section of large U.S. public firms are inconsistent with recent claims that entrenched managers design their own compensation contracts. The interactions of the corporate governance mechanisms with total pay-for-performance and excess compensation can be explained by governance substitution. If a firm has generally weaker governance, the compensation contract helps better align the interests of shareholders and the CEO.
Keywords: G32, G34, J33Accepted Paper Series
Date posted: January 17, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.313 seconds