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The Effect of Mergers, Divestitures, and Board Composition on CEO Compensation Before and After the Financial Crisis

Ralph Sonenshine, Nathan Larson and Michael Cauvel

No 2015-08, Working Papers from American University, Department of Economics

Abstract: This paper revisits the determinants of CEO compensation using recent data (covering 125 firms from 2003 to 2012) spanning the 2008 financial crisis. Overall, consistent with earlier studies, we find firm size and board composition to be the most consistent indicators of CEO pay. However, pay becomes more performance-oriented in the years after the financial crisis, which may reflect tighter governance. We give particular attention to the role played by changes in the CEO’s scope due to mergers and divestitures – the latter has seldom been considered before. We also investigate how these factors differ by industry.

JEL-codes: G3 G34 M12 M41 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-hrm
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