CEO pay disparity, chaebol affiliations, and implied cost of equity capital

Hong-min Chun

Finance Research Letters, 2019, vol. 31, issue C

Abstract: This paper examines CEO pay disparity and its effect on the implied cost of equity capital (ICOE). Existing empirical results suggest that a higher CEO pay disparity increases the ICOE. Thus, a chaebol-affiliated firm with a high CEO pay disparity could be a possible factor contributing to the risk premium. As a result, in Korea, a higher CEO pay disparity represents a risk premium closely related to the management power perspective (Chen et al., 2013). Further, this positive association is more pronounced in a chaebol with low internal monitoring (low outside director ratio) firms.

Keywords: CEO pay disparity; Implied cost of equity capital; Chaebol; Outside director; Agency problem (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:31:y:2019:i:c:s1544612318303465

DOI: 10.1016/j.frl.2018.12.029

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