Cronyism and Delaware Incorporation: An Examination on Excess Compensation

Qian Xie

Accounting and Finance Research, 2013, vol. 2, issue 4, 60

Abstract: This paper investigates whether Delaware incorporation relates to cronyism by examining excess director and CEO compensation. I find that excess director compensation is significantly and positively related to excess CEO compensation in both Delaware and non-Delaware firms. However, excess CEO compensation in non-Delaware firms is negatively associated with firm performance. The result indicates that cronyism does exist in non-Delaware firms but not in Delaware firms. Therefore, Delaware incorporation does not favor managers at the expense of shareholders.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:afr111:v:2:y:2013:i:4:p:60

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