What Are Friends for? CEO Networks, Pay and Corporate Governance

Rayna Brown, Ning Gao, Edward Lee and Konstantinos Stathopoulos ()
Additional contact information
Rayna Brown: University of Melbourne
Ning Gao: University of Manchester
Edward Lee: University of Manchester
Konstantinos Stathopoulos: University of Manchester

A chapter in Corporate Governance, 2012, pp 287-307 from Springer

Abstract: Abstract We investigate the impact of CEO networking on compensation arrangements. Unlike existing studies that are largely based on board interlocks, we use a unique measure that calculates the direct ties the CEO has created during her life. We show that a CEO’s compensation is significantly affected by her power in the managerial labour market. We find that the size of the CEO network is positively related to the level of CEO compensation and inversely related to its pay-performance sensitivity. We interpret our results as direct evidence that managerial power influences compensation. However, in firms where shareholders rights are well protected, the impact of the CEO network over pay arrangements diminishes. This implies that outrage cost and governance reduces managerial power in pay negotiation. Overall, our results are consistent with the predictions of the managerial power approach.

Keywords: Corporate Governance; Chief Executive Officer; Managerial Power; Board Size; Board Independence (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (19)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-31579-4_12

Ordering information: This item can be ordered from
http://www.springer.com/9783642315794

DOI: 10.1007/978-3-642-31579-4_12

Access Statistics for this chapter

More chapters in Springer Books from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().