CEO Compensation and Board Structure

51 Pages Posted: 17 May 2006 Last revised: 21 Dec 2010

See all articles by Vidhi Chhaochharia

Vidhi Chhaochharia

University of Miami - Department of Finance

Yaniv Grinstein

Interdisciplinary Center (IDC) Herzliyah; Cornell University - Samuel Curtis Johnson Graduate School of Management; European Corporate Governance Institute (ECGI)

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

Chhaochharia, Vidhi and Grinstein, Yaniv and Grinstein, Yaniv, CEO Compensation and Board Structure (September 10, 2008). Available at SSRN: or

Vidhi Chhaochharia (Contact Author)

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Yaniv Grinstein

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Sage Hall
Ithaca, NY 14853
United States
607-255-8686 (Phone)
607-254-4590 (Fax)

Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 46150

European Corporate Governance Institute (ECGI)

B-1050 Brussels

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