CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences
University of Texas at San Antonio - Department of Finance
Laura T. Starks
University of Texas at Austin - Department of Finance
May 2, 2013
We examine CEO tournament structure (measured as the ratio of pay between the CEO and other top executives) using a cross-country sample and find it to be steeper in the U.S. than in other countries. Testing the primary implications of tournament theory, we find that across countries, the tournament structure tends to be positively related to firm value. Further, we find that the tournament structure itself varies across firms systematically according to firm and country characteristics. In particular, the cultural values of Power distance, Fair income differences and Competition are significantly associated with differences in tournament structures.
Number of Pages in PDF File: 47
Keywords: Executive compensation, Tournaments, International pay differences, Culture, Corporate governance
JEL Classification: G15, G3, G32, G34working papers series
Date posted: February 24, 2012 ; Last revised: May 7, 2013
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