This paper fleshes out the rent extraction view of CEO compensation put forward by the managerial power theory (Bebchuk, Fried, & Walker, 2002), and tests its main implications on the relation between CEO power and the structure of CEO pay. For a measure of CEO power most relevant to managerial...

This paper models a situation where an entrepreneur with assets in place and uncertain development opportunities decides whether to sell the business to public capital markets or to place it privately to a conglomerate. It finds that the two-tiered managerial hierarchy of a conglomerate is...