Cronyism and the Determinants of Chairman Compensation
(2015) In Journal of Business Ethics 131(1). p.69-87- Abstract
- This study examines determinants of chairman compensation in a supervisory board setting and, specifically, the relationship between chairman and CEO compensation. Using a sample of publicly listed firms in Sweden, the study indicates that chairman compensation—
despite its fixed nature—is reflective of firm performance via a positive relationship to CEO compensation. As CEO compensation is set before chairman compensation, we argue that the chairman may be inclined to conspire with the CEO in earnings management efforts at the expense of monitoring on behalf of investors. Supporting our cronyism argument, we find evidence that the gap between chairman
and CEO compensation is less at firms where the chairman had... (More) - This study examines determinants of chairman compensation in a supervisory board setting and, specifically, the relationship between chairman and CEO compensation. Using a sample of publicly listed firms in Sweden, the study indicates that chairman compensation—
despite its fixed nature—is reflective of firm performance via a positive relationship to CEO compensation. As CEO compensation is set before chairman compensation, we argue that the chairman may be inclined to conspire with the CEO in earnings management efforts at the expense of monitoring on behalf of investors. Supporting our cronyism argument, we find evidence that the gap between chairman
and CEO compensation is less at firms where the chairman had previously served in the executive management team. The close ties between the chairman and CEO compensation add to the understanding of the relative success of the managerial power theory versus the agency theory in explaining CEO compensation. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/4647898
- author
- Oxelheim, Lars LU and Clarkson, Kevin
- organization
- publishing date
- 2015
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Chairman compensation, CEO compensation, Cronyism, Pay-for-performance, Ownership structure, Supervisory board
- in
- Journal of Business Ethics
- volume
- 131
- issue
- 1
- pages
- 69 - 87
- publisher
- Springer
- external identifiers
-
- wos:000361719300006
- scopus:84942292738
- ISSN
- 1573-0697
- DOI
- 10.1007/s10551-014-2260-2
- language
- English
- LU publication?
- yes
- id
- c4fa52cf-f079-4116-b5e6-9f43fa6f4a05 (old id 4647898)
- alternative location
- http://link.springer.com/article/10.1007%2Fs10551-014-2260-2#
- date added to LUP
- 2016-04-01 10:06:03
- date last changed
- 2022-04-27 18:31:03
@article{c4fa52cf-f079-4116-b5e6-9f43fa6f4a05,
abstract = {{This study examines determinants of chairman compensation in a supervisory board setting and, specifically, the relationship between chairman and CEO compensation. Using a sample of publicly listed firms in Sweden, the study indicates that chairman compensation—<br/><br>
despite its fixed nature—is reflective of firm performance via a positive relationship to CEO compensation. As CEO compensation is set before chairman compensation, we argue that the chairman may be inclined to conspire with the CEO in earnings management efforts at the expense of monitoring on behalf of investors. Supporting our cronyism argument, we find evidence that the gap between chairman<br/><br>
and CEO compensation is less at firms where the chairman had previously served in the executive management team. The close ties between the chairman and CEO compensation add to the understanding of the relative success of the managerial power theory versus the agency theory in explaining CEO compensation.}},
author = {{Oxelheim, Lars and Clarkson, Kevin}},
issn = {{1573-0697}},
keywords = {{Chairman compensation; CEO compensation; Cronyism; Pay-for-performance; Ownership structure; Supervisory board}},
language = {{eng}},
number = {{1}},
pages = {{69--87}},
publisher = {{Springer}},
series = {{Journal of Business Ethics}},
title = {{Cronyism and the Determinants of Chairman Compensation}},
url = {{http://dx.doi.org/10.1007/s10551-014-2260-2}},
doi = {{10.1007/s10551-014-2260-2}},
volume = {{131}},
year = {{2015}},
}