CEO compensation, director compensation, and firm performance: Evidence of cronyism?

被引：410
|
作者：
Brick, Ivan E.
Palmon, Oded
Wald, John K. [1 ]
机构：
[1] Penn State Univ, Smeal Coll Business, University Pk, PA 16802 USA
[2] Rutgers Business Sch Newark & New Brunswick, Dept Finance & Econ, Newark, NJ 07102 USA
来源：
JOURNAL OF CORPORATE FINANCE | 2006年 / 12卷 / 03期
关键词：
director compensation; CEO compensation; firm performance; cronyism;
D O I：
10.1016/j.jcorpfin.2005.08.005
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
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. (c) 2005 Elsevier B.V All rights reserved.
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页码：403 / 423
页数：21
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