CEO compensation,director compensation,and firm performance: Evidence of cronyism? |
| |
| Institution: | 1. Fisher School of Business, Ohio State University, 840 Fisher Hall, 2100 Neil Ave, Columbus OH 43210, USA;2. W.P. Carey School of Business, Arizona State University, Tempe, AZ 85287, USA;3. John M. Olin School of Business, Washington University, Campus Box 1133, 1 Brookings Dr, St. Louis, MO 63130, USA;1. Edwin L. Cox School of Business, Southern Methodist University, Dallas, TX 75275-0333, United States;2. Neeley School of Business, Texas Christian University, Fort Worth, TX 76109, United States;1. Bocconi University and IGIER, Via Roentgen 1, 20136 Milan, Italy;2. Edwin L. Cox School of Business, Southern Methodist University, United States;3. Belarusian Economic Research and Outreach Center (BEROC);1. Saunders College of Business, Rochester Institute of Technology, 105 Lomb Memorial Drive, Rochester, NY 14623-5608, United States;2. Faculty of Economics and Business, University of Groningen, Nettlebosje 2 9747 AE Groningen, The Netherlands;3. Lally School of Management, Rensselaer Polytechnic Institute, 110, 8th Street, Troy, NY 12180, United States;1. Institute of Finance, National Chiao Tung University, No. 1001, Ta-Hsueh Rd., Hsinchu 30010, Taiwan;2. Department of Management, Strome College of Business, Old Dominion University, Norfolk, VA 23529, USA |
| |
| Abstract: | We model CEO and director compensation using firm characteristics, CEO characteristics, and governance variables. After controlling for monitoring proxies, we find a significant positive relationship between CEO and director compensation. We hypothesize that this relationship could be due to unobserved firm complexity (omitted variables), and/or to excess compensation of directors and managers. We also find evidence that excess compensation (both director and CEO) is associated with firm underperformance. We therefore conclude that the evidence is consistent with excessive compensation due to mutual back scratching or cronyism. The evidence suggests that excessive compensation has an effect on firm performance that is independent of the poor governance variables discussed by previous studies. |
| |
| Keywords: | |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
