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A Priori Conceptions, Methodological Dogmatism and Theory versus Practice: three reasons why CEO pay research lacks convergence

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  • Graham O'Neill

Abstract

Pay Without Performance: The Unfilled Promise of Executive Compensation by Lucian Bebchuk and Jesse Fried (Harvard University Press, 2004) challenges the view that executive remuneration arrangements are designed to maximise shareholder value. The authors argue that managerial power results in remuneration being structured to benefit executives at the expense of shareholders. This paper contends that Bebchuk and Fried's approach illustrates issues that contribute to the problematic nature of executive remuneration research. In particular, it is proposed that a priori conceptions about executive remuneration, methodological dogmatism in research approaches and a significant gap between theory and practice, each contribute to the lack of convergence in executive pay research. Illustrative data taken from interview‐based research conducted with Australian non‐executive directors supports the view that reliance on economic efficiency arguments alone does not provide a sufficient framework to explain the subjective, judgemental and socially interactive processes involved in determining executive pay.

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  • Graham O'Neill, 2007. "A Priori Conceptions, Methodological Dogmatism and Theory versus Practice: three reasons why CEO pay research lacks convergence," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(4), pages 692-700, July.
    • Handle: RePEc:bla:corgov:v:15:y:2007:i:4:p:692-700
    DOI: 10.1111/j.1467-8683.2007.00598.x
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    References listed on IDEAS

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    1. Benjamin E. Hermalin & Michael S. Weisbach, 2003. "Boards of directors as an endogenously determined institution: a survey of the economic literature," Economic Policy Review, Federal Reserve Bank of New York, vol. 9(Apr), pages 7-26.
    2. Stiles, Philip & Taylor, Bernard, 2002. "Boards at Work: How Directors View their Roles and Responsibilities," OUP Catalogue, Oxford University Press, number 9780199258161.
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