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CEO Compensation and Board Structure RevisitedKatherine GuthrieCollege of William and Mary - Mason School of Business Jan SokolowskyUnaffiliated Kam-Ming WanHong Kong Polytechnic University September 18, 2010 Journal of Finance, Vol. 67, No. 3, pp. 1149-1168, June 2012 Abstract: Chhaochharia and Grinstein (JF, 2009) estimate that CEO pay decreases by 17% more in firms that were not compliant with the recent NYSE/NASDAQ board independence requirement than in firms that were compliant. We document that 74% of this magnitude is attributable to two outliers out of 865 sample firms. In addition, we find that the compensation committee independence requirement increases CEO total pay, particularly in the presence of effective shareholder monitoring. Our evidence casts doubt on the effectiveness of independent directors in constraining CEO pay as suggested by the managerial power hypothesis.
Number of Pages in PDF File: 30 Keywords: Executive Compensation, CEO Pay, Managerial Power, Board Structure, Board Independence, Corporate Governance, Compensation Committee, Sarbanes-Oxley, NYSE, Nasdaq JEL Classification: G34, G38, J31, J33 Accepted Paper SeriesDate posted: September 22, 2010 ; Last revised: June 8, 2012Suggested CitationContact Information
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