CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences

58 Pages Posted: 8 May 2013 Last revised: 22 Aug 2015

See all articles by Natasha Burns

Natasha Burns

University of Texas at San Antonio - Department of Finance

Kristina Minnick

Bentley University

Laura T. Starks

University of Texas at Austin - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: August 10, 2013

Abstract

Using a cross-country sample, we examine the CEO tournament structure (measured alternatively as the ratio and the difference of pay between the CEO and other top executives within a firm). We find the tournament structure to vary systematically with firm and country cultural characteristics. In particular, firm size and the cultural values of Power distance, Fair income differences and Competition are significantly associated with variations in tournament structures. We also establish support for the primary implication of tournament theory in that tournament structure tends to be positively related to firm value, even after controlling for endogeneity.

Keywords: Executive compensation, Tournaments, International pay differences, Culture, Corporate governance

JEL Classification: G15, G3, G32, G34

Suggested Citation

Burns, Natasha and Minnick, Kristina and Starks, Laura T., CEO Tournaments: A Cross-Country Analysis of Causes, Cultural Influences and Consequences (August 10, 2013). Available at SSRN: https://ssrn.com/abstract=2261788 or http://dx.doi.org/10.2139/ssrn.2261788

Natasha Burns (Contact Author)

University of Texas at San Antonio - Department of Finance ( email )

San Antonio, TX 78249
United States
210-458-6838 (Phone)

Kristina Minnick

Bentley University ( email )

175 Forest Street
Waltham, MA 02154
United States

HOME PAGE: http://www.profminnick.com/

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

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