CEO Pay Slice as a measure of CEO dominance

Maxim Zagonov and Galla Salganik-Shoshan

Research in International Business and Finance, 2018, vol. 45, issue C, 571-576

Abstract: CEO Pay Slice (CPS), a measure of CEO relative compensation introduced by Bebchuk, Cremers and Peyer [2011. Journal of Financial Economics 102, 199–221], is used widely in the literature as a proxy for chief executive officer dominance. Nonetheless, CPS does not control for the distribution of pay among the top executives and, as we show empirically, often misestimates the level of CEO power. As a result, its empirical application exposes researchers to the risk of drawing false conclusions. We propose a number of supplementary measures that could be used in conjunction with CPS to improve the measurement accuracy of CEO dominance.

Keywords: Corporate governance; Executive compensation; Entrenchment; Pay distribution (search for similar items in EconPapers)
JEL-codes: D23 G38 J33 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:45:y:2018:i:c:p:571-576

DOI: 10.1016/j.ribaf.2017.07.092

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