Abstract

http://ssrn.com/abstract=1572406
 
 

References (27)



 
 

Citations (2)



 


 



Are CEOs in Public U.S. Firms Overpaid? New Evidence from Private Firms


Huasheng Gao


Nanyang Technological University

Kai Li


University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

Michael L. Lemmon


University of Utah - Department of Finance

March 15, 2012


Abstract:     
We provide new evidence on the debate whether CEOs in public U.S. firms are significantly overpaid using their counterparts in private U.S. firms over the period 1999 to 2008. Using public and private firm CEO pay data made available through mandated SEC disclosures, we first show that after controlling for firm and CEO characteristics, public firm CEOs are paid more than private firm CEOs, with a modest pay premium of about 20%, and public firm CEOs are given more on-going equity incentives. This public pay premium becomes economically insignificant after accounting for differences in risk, dividend policy, and CEO turnover between public and private firms. We then show that both public and private firm CEO annual compensation is positively and significantly related to firm accounting performance, and the pay-performance link is much stronger in public firms. We provide some evidence that the pay differential is related to labor market segmentation between the two types of firms and increasing over time. Finally, when firms transition from private to public status, we find that both the level and structure of pay change significantly in ways that corroborate our findings from the cross-section.

Number of Pages in PDF File: 49

Keywords: CEO annual compensation; equity incentives; pay structure; pay-performance sensitivity; private firms; public firms

JEL Classification: G34

working papers series





Download This Paper

Date posted: March 17, 2010 ; Last revised: March 19, 2012

Suggested Citation

Gao, Huasheng and Li, Kai and Lemmon, Michael L., Are CEOs in Public U.S. Firms Overpaid? New Evidence from Private Firms (March 15, 2012). Available at SSRN: http://ssrn.com/abstract=1572406 or http://dx.doi.org/10.2139/ssrn.1572406

Contact Information

Huasheng Gao
Nanyang Technological University ( email )
S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore
HOME PAGE: http://www3.ntu.edu.sg/home/hsgao/
Kai Li
University of British Columbia (UBC) - Sauder School of Business ( email )
2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)
HOME PAGE: http://finance.sauder.ubc.ca/~kaili
China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

Michael L. Lemmon (Contact Author)
University of Utah - Department of Finance ( email )
David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-5210 (Phone)
801-581-7214 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 2,522
Downloads: 449
Download Rank: 36,450
References:  27
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.375 seconds