Abstract

http://ssrn.com/abstract=972197
 
 

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Inside the Black Box: The Role and Composition of Compensation Peer Groups


Michael W. Faulkender


University of Maryland - Robert H. Smith School of Business

Jun Yang


Indiana University - Kelley School of Business - Department of Finance

May 1, 2010

AFA 2008 New Orleans Meetings Paper

Abstract:     
This paper considers the features of the newly disclosed compensation peer groups and demonstrates their significant role in explaining variations in chief executive officer (CEO) compensation beyond that of other benchmarks such as the industry-size peers. After controlling for industry, size, visibility, CEO responsibility, and talent flows, we find that firms appear to select highly paid peers to justify their CEO compensation and this effect is stronger in firms where the compensation peer group is smaller, where the CEO is the chairman of the board of directors, where the CEO has longer tenure, and where directors are busier serving on multiple boards.

Number of Pages in PDF File: 36

Keywords: Corproate Governance, Executive Compensation, Compensation Peer Groups

JEL Classification: G34, J33

working papers series





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Date posted: March 21, 2007 ; Last revised: May 14, 2014

Suggested Citation

Faulkender, Michael W. and Yang, Jun, Inside the Black Box: The Role and Composition of Compensation Peer Groups (May 1, 2010). AFA 2008 New Orleans Meetings Paper. Available at SSRN: http://ssrn.com/abstract=972197 or http://dx.doi.org/10.2139/ssrn.972197

Contact Information

Michael W. Faulkender
University of Maryland - Robert H. Smith School of Business ( email )
College Park, MD 20742-1815
United States
Jun Yang (Contact Author)
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3395 (Phone)
812-855-5875 (Fax)

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