There is a debate on whether executive pay reflects rent extraction due to "managerial power" or is the result of arms-length bargaining in a principal-agent framework. In this paper we offer a test of the managerial power hypothesis by empirically examining the CEO compensation of U.S. public...

We study the dynamics of managerial influence and Chief Executive Officers' (CEOs) compensation over the course of financial distress during 1992 to 2012. Using a matching estimator to identify suitable controls, we find that under distress firms reduce managerial board appointments, intensify...