Peer choice in CEO compensation

Ana M. Albuquerque; Gus de Franco; Rodrigo S. Verdi

doi:10.1016/j.jfineco.2012.10.002

Peer choice in CEO compensation

Ana M. Albuquerque^*, Gus de Franco, Rodrigo S. Verdi

^*Autor correspondente para este trabalho

Resultado de pesquisa › revisão de pares

134 Citações (Scopus)

Resumo

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.

Idioma original	English
Páginas (de-até)	160-181
Número de páginas	22
Revista	Journal of Financial Economics
Volume	108
Número de emissão	1
DOIs	https://doi.org/10.1016/j.jfineco.2012.10.002
Estado da publicação	Publicado - abr. 2013

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10.1016/j.jfineco.2012.10.002

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Citação

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abstract = "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.",

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Peer choice in CEO compensation

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