CEO Compensation and Board Structure
51 Pages Posted: 17 May 2006 Last revised: 21 Dec 2010
Date Written: September 10, 2008
In response to corporate scandals in 2001 and 2002, major U.S. stock exchanges issued new board requirements to enhance board oversight. We find a significant decrease in CEO compensation for firms that were more affected by these requirements, compared with firms that were less affected, taking into account unobservable firm effects, time-varying industry effects, size, and performance. The decrease in compensation is particularly pronounced in the subset of affected firms with no outside blockholder on the board and in affected firms with low concentration of institutional investors. Our results suggest that the new board requirements affected CEO compensation decisions.
Keywords: CEO compensation, Board of Directors
JEL Classification: G34, G38, J33, J38
Suggested Citation: Suggested Citation