Shareholder Rights, Boards, and CEO Compensation
I analyze the role of executive compensation in corporate governance. As proxies for corporate governance, I use board size, board independence, CEO-chair duality, institutional ownership concentration, CEO tenure, and an index of shareholder rights. The results from a broad cross-section of large U.S. public firms are inconsistent with recent claims that entrenched managers design their own compensation contracts. The interactions of the corporate governance mechanisms with total pay-for-performance and excess compensation can be explained by governance substitution. If a firm has generally weaker governance, the compensation contract helps better align the interests of shareholders and the CEO. Copyright 2009, Oxford University Press.
Year of publication: |
2009
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Authors: | Fahlenbrach, Rüdiger |
Published in: |
Review of Finance. - European Finance Association - EFA, ISSN 1572-3097. - Vol. 13.2009, 1, p. 81-113
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Publisher: |
European Finance Association - EFA |
Saved in:
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