Shareholder Rights, Boards, and CEO Compensation

Ruediger Fahlenbrach

Working Paper Series from Ohio State University, Charles A. Dice Center for Research in Financial Economics

Abstract: I analyze the role of executive compensation in corporate governance. As proxies for corporate governance, I use board size, board independence, CEO-chair duality, institutional ownership concentration, CEO tenure, and an index of shareholder rights. The results from a broad cross-section of large U.S. public firms are inconsistent with recent claims that entrenched managers design their own compensation contracts. The interactions of the corporate governance mechanisms with total pay-for-performance and excess compensation can be explained by governance substitution. If a firm has generally weaker governance, the compensation contract helps better align the interests of shareholders and the CEO.

JEL-codes: G32 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Shareholder Rights, Boards, and CEO Compensation (2009)
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