We provide fresh evidence regarding the relation between compensation consultants and CEO pay. First, firms that employ consultants have higher-paid CEOs—this result is robust to firm fixed-effects and matching on economic and governance variables. Second, while this relation is partly due to...

This paper illustrates why some firms hire compensation consultants while others do not, and the implications for CEO compensation. We consider a matching model of firms and CEOs, in which firms are governed by effective boards that act on behalf of shareholders, non-conflicting consultants...