Executive Compensation: Where We are, and How We Got There

George Constantinides, Milton Harris, and René Stulz (eds.), Handbook of the Economics of Finance. Elsevier Science North Holland (Forthcoming)

Marshall School of Business Working Paper No. FBE 07.12

179 Pages Posted: 17 Apr 2012 Last revised: 13 Aug 2012

See all articles by Kevin J. Murphy

Kevin J. Murphy

University of Southern California - Marshall School of Business; USC Gould School of Law

Date Written: August 12, 2012

Abstract

In this study, I summarize the current state of executive compensation, discuss measurement and incentive issues, document recent trends in executive pay in both U.S. and international firms, and analyze the evolution of executive pay over the past century. Most recent analyses of executive compensation have focused on efficient-contracting or managerial-power rationales for pay, while ignoring or downplaying the causes and consequences of disclosure requirements, tax policies, accounting rules, legislation, and the general political climate. A major theme of this study is that government intervention has been both a response to and a major driver of time trends in executive compensation over the past century, and that any explanation for pay that ignores political factors is critically incomplete.

Keywords: Executive compensation, CEO Pay, Regulation, Disclosure, Stock options, Accounting, Corporate governance, Sarbanes-Oxley, Dodd-Frank, International Pay

JEL Classification: G34, G38, J31, J33, J38, K22, K34, M12, M41, M48, M52

Suggested Citation

Murphy, Kevin J., Executive Compensation: Where We are, and How We Got There (August 12, 2012). George Constantinides, Milton Harris, and René Stulz (eds.), Handbook of the Economics of Finance. Elsevier Science North Holland (Forthcoming), Marshall School of Business Working Paper No. FBE 07.12, Available at SSRN: https://ssrn.com/abstract=2041679 or http://dx.doi.org/10.2139/ssrn.2041679

Kevin J. Murphy (Contact Author)

University of Southern California - Marshall School of Business ( email )

BRI 308, MC 0804
Los Angeles, CA 90089-0804
United States
213-740-6553 (Phone)
213-740-6650 (Fax)

USC Gould School of Law

699 Exposition Boulevard
Los Angeles, CA 90089
United States

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