Corporate Governance, Compensation Consultants, and CEO Pay Levels

Christopher S. Armstrong, Christopher D. Ittner and David F. Larcker
Additional contact information
Christopher S. Armstrong: University of Pennsylvania
Christopher D. Ittner: University of Pennsylvania
David F. Larcker: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: This study investigates the relation between corporate governance and CEO pay levels, and the extent to which the higher pay found in firms using compensation consultants is related to governance differences. Using proxy statement disclosures from 2,110 companies, we find that CEO pay is higher in firms with weaker governance, and that firms with weaker governance are more likely to use compensation consultants. CEO pay remains higher in clients of consulting firms even after controlling for economic determinants of compensation. However, when consultant users and non-users are matched on both economic and governance characteristics, differences in pay levels are not statistically significant, indicating that governance differences explain much of higher pay in clients of compensation consultants. We find no support for claims that CEO pay is higher in potentially "conflicted" consultants that also offer additional non-compensation related services.

Date: 2010-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://gsbapps.stanford.edu/researchpapers/library/RP2068.pdf
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to gsbapps.stanford.edu:443 (certificate verify failed) (http://gsbapps.stanford.edu/researchpapers/library/RP2068.pdf [302 Found]--> https://gsbapps.stanford.edu/researchpapers/library/RP2068.pdf)

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:ecl:stabus:2068

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().