Peer choice in CEO compensation
Current research shows that firms are more likely to benchmark against peers that pay their Chief Executive Officers (CEOs) higher compensation, reflecting self serving behavior. We propose an alternative explanation: the choice of highly paid peers represents a reward for unobserved CEO talent. We...
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| Veröffentlicht in: | Journal of financial economics 2013-04, Vol.108 (1), p.160-181 |
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| container_end_page | 181 |
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| container_title | Journal of financial economics |
| container_volume | 108 |
| creator | Albuquerque, Ana M. De Franco, Gus Verdi, Rodrigo S. |
| description | Current research shows that firms are more likely to benchmark against peers that pay their Chief Executive Officers (CEOs) higher compensation, reflecting self serving behavior. We propose an alternative explanation: the choice of highly paid peers represents a reward for unobserved CEO talent. We test this hypothesis by decomposing the effect of peer selection into talent and self serving components. Consistent with our prediction, we find that the association between a firm's selection of highly paid peers and CEO pay mostly represents compensation for CEO talent. |
| doi_str_mv | 10.1016/j.jfineco.2012.10.002 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2013-04, Vol.108 (1), p.160-181 |
| issn | 0304-405X 1879-2774 |
| language | eng |
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| source | Elsevier ScienceDirect Journals |
| subjects | Benchmarking Chief executive officers Compensation Decision analysis Executive compensation Forecasts Organizational behavior Organizational behaviour Peer groups Peers Personnel management Studies |
| title | Peer choice in CEO compensation |
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