 The CEO pay slice: Managerial power or efficient contracting? Some indirect evidenceMartin Bugeja, Zoltan Matolcsy and Helen Spiropoulos Journal of Contemporary Accounting and Economics, 2017, vol. 13, issue 1, 69-87 Abstract: This paper uses the CEO Pay Slice (CPS) to provide insight into the managerial power versus efficient contracting debate on CEO compensation. Based on a sample of 9978 U.S. listed firms for the period 2001–2010 our evidence is inconsistent with managerial power. For instance, we find that the CPS of a newly appointed CEO does not differ to that of the outgoing CEO and also does not increase over time. Furthermore, we find no relation between the CPS and subsequent firm performance, or between a measure of excess CPS and subsequent firm performance. In addition, we show that most firms are quick to reduce excess CPS levels. However, for a small subsample in which excessive CPS persists, we observe a negative relation between CPS and subsequent firm performance. Overall our evidence is largely consistent with an efficient contracting explanation of CEO compensation as opposed to a managerial power explanation. Keywords: CEO pay slice; Decision authority; Firm performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:13:y:2017:i:1:p:69-87 DOI: 10.1016/j.jcae.2017.01.003 Access Statistics for this article Journal of Contemporary Accounting and Economics is currently edited by Agnes C.S. Cheng, P. Clarkson, F.A. Gul, Zoltan Matolcsy, Dan Simunic and Ben Srinidhi More articles in Journal of Contemporary Accounting and Economics from Elsevier |
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