CEO Compensation and Board Structure – Rejoinder

10 Pages Posted: 16 Jun 2012  

Katherine Guthrie

College of William and Mary - Mason School of Business

Jan Sokolowsky

Independent

Kam-Ming Wan

Hong Kong Polytechnic University

Date Written: April 18, 2012

Abstract

In their reply to our critique, Chhaochharia and Grinstein (2012) suggest that (i) Apple is a prime example of how board regulations affect CEO pay and should therefore not be excluded from the study, and (ii) their original results are robust to excluding the outliers when extending the pre-event sample period from 2000 to 2002 back to 1996. In this rejoinder, we (i) dispute that Apple is a fitting example to illustrate the causal effect of board independence on CEO pay, (ii) caution against drawing conclusions about the robustness of the results from the new regression results in the reply (e.g., due to lack of relevance, sample selection issues, and more outlier effects), and (iii) argue that important omissions in the reply cast further doubt on the conclusions advocated by CG. In a nutshell, the existing evidence simply does not support the view that mandated board independence helps rein in executive compensation.

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

Suggested Citation

Guthrie, Katherine and Sokolowsky, Jan and Wan, Kam-Ming, CEO Compensation and Board Structure – Rejoinder (April 18, 2012). Available at SSRN: https://ssrn.com/abstract=2084630 or http://dx.doi.org/10.2139/ssrn.2084630

Katherine Guthrie

College of William and Mary - Mason School of Business ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States
7572212832 (Phone)

Kam-Ming Wan

Hong Kong Polytechnic University ( email )

Hung Hom, Kowloon
Hong Kong
(852) 2766-7053 (Phone)
(852) 2330-9845 (Fax)

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