Download This PaperWas Adam Smith Right? Evidence of Compensating Differential in CEO Pay
24 Pages Posted: 19 Jan 2016
Date Written: January 2016
Abstract
This paper estimates the compensating differential in CEO pay for the increasing risk of dismissal using contracted severance pay eligibility of the CEO as the main instrument. US CEOs receive a 3 per cent premium in pay for each percentage point increase in the risk of dismissal. In pointing to the dismissal risk as a determinant of CEO pay, these findings contribute to the debate on the recent growth in CEO pay and the potential impacts of governance reforms.
Suggested Citation: Suggested Citation
HomRoy, Swarnodeep, Was Adam Smith Right? Evidence of Compensating Differential in CEO Pay (January 2016). The Manchester School, Vol. 84, Issue 1, pp. 1-24, 2016, Available at SSRN: https://ssrn.com/abstract=2717160 or http://dx.doi.org/10.1111/manc.12086
Do you have a job opening that you would like to promote on SSRN?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.