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Determinants of CEO Pay: A Comparison of ExecuComp and Non-ExecuComp Firms

43 Pages Posted: 14 Dec 2005 Last revised: 15 Jun 2010

Brian D. Cadman

University of Utah - David Eccles School of Business

Sandy Klasa

University of Arizona - Department of Finance

Steven R. Matsunaga

University of Oregon

Date Written: October 10, 2009

Abstract

We document that firms included in the ExecuComp database tend to be larger, more complex, followed by more analysts, have greater stock liquidity levels, and have higher total, but less concentrated, institutional ownership than other firms. Based on these differences, we test and find support for three predictions. First, ExecuComp firms rely more heavily on earnings and stock returns in determining CEO cash compensation. Second, the weight on earnings is more sensitive to differences in the extent of growth opportunities for ExecuComp firms. Third, the positive relation between institutional ownership concentration and the value of stock option grants is stronger for ExecuComp firms. Overall, our results suggest that ExecuComp and non-ExecuComp firms operate in different contracting environments that lead to differences in the design of their executive compensation contracts. As a result, care should be taken in extending results based on ExecuComp samples to non-ExecuComp firms.

Keywords: Executive compensation, Stock options, Ownership structure, Institutional investors

JEL Classification: G32, G34

Suggested Citation

Cadman, Brian D. and Klasa, Sandy and Matsunaga, Steven R., Determinants of CEO Pay: A Comparison of ExecuComp and Non-ExecuComp Firms (October 10, 2009). Accounting Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=869459

Brian D. Cadman (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 Campus Center Drive
Salt Lake City, UT 84112
United States
801-585-9517 (Phone)

HOME PAGE: http://www.business.utah.edu/bio/briancadman

Sandy Klasa

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-8761 (Phone)

Steven R. Matsunaga

University of Oregon ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States
503-346-3340 (Phone)
503-346-3341 (Fax)

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