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CEO Influence and Executive Compensation

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  • Sridharan, Uma V

Abstract

The sales-maximization hypothesis and the shareholder wealth-maximization hypothesis have been suggested in prior finance literature to explain the determinants of CEO pay. This paper proposes that CEO influence over the board is an additional explanation for the size of CEO pay. Evidence from the 1989-1991 period indicates that CEO pay is positively related to measures of CEO influence over the board. Results of this study suggest that CEO salary levels are mostly a function of CEO influence over the board, the growth in sales, and the size of the firm. Copyright 1996 by MIT Press.

Suggested Citation

  • Sridharan, Uma V, 1996. "CEO Influence and Executive Compensation," The Financial Review, Eastern Finance Association, vol. 31(1), pages 51-66, February.
    • Handle: RePEc:bla:finrev:v:31:y:1996:i:1:p:51-66
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    Cited by:

    1. Bradley W. Benson & Wallace N. Davidson, 2010. "The Relation between Stakeholder Management, Firm Value, and CEO Compensation: A Test of Enlightened Value Maximization," Financial Management, Financial Management Association International, vol. 39(3), pages 929-964, September.
    2. Guo, Lian & Peng, Diefeng & Rao, Yulei & Zhuang, Zili, 2023. "Visiting monks: Are nonlocal CEOs paid more?☆," International Review of Financial Analysis, Elsevier, vol. 85(C).
    3. Allan Hodgson & Michael Seamer & Katherine Uylangco, 2020. "Does stronger corporate governance constrain insider trading? Asymmetric evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(3), pages 2665-2687, September.
    4. Dev R. Mishra, 2021. "Charitable inclination and the chief executive officer's pay package," The Financial Review, Eastern Finance Association, vol. 56(1), pages 85-108, February.
    5. Jullavut Kittiakaraskun & Yiuman Tse & George H.K. Wang, 2011. "The Impact of Trading Activity by Trader Types on Asymmetric Volatility in Nasdaq-100 Index Futures," Working Papers 0021, College of Business, University of Texas at San Antonio.
    6. Donovan A. McFarlane, 2015. "Gaps in Executive and Worker Compensation as an Organizational and Management Challenge," Journal of Entrepreneurship and Business Innovation, Macrothink Institute, Journal of Entrepreneurship and Business Innovation, vol. 2(1), pages 1-15, June.
    7. Sharad Asthana, 2007. "Do Highly Compensated Participants Influence The Management Of Qualified Pension Plans?," Working Papers 0025, College of Business, University of Texas at San Antonio.
    8. Elsaid, Eahab & Davidson III, Wallace N. & Benson, Bradley W., 2009. "CEO compensation structure following succession: Evidence of optimal incentives with career concerns," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1389-1409, November.
    9. Efendi, Jap & Srivastava, Anup & Swanson, Edward P., 2007. "Why do corporate managers misstate financial statements? The role of option compensation and other factors," Journal of Financial Economics, Elsevier, vol. 85(3), pages 667-708, September.
    10. Marsha Weber & Donna Dudney, 2003. "A Reduced Form Coefficients Analysis of Executive Ownership, Corporate Value, and Executive Compensation," The Financial Review, Eastern Finance Association, vol. 38(3), pages 399-413, August.
    11. Jennifer Yin & Steven Balsam & Afshad Irani, 2009. "Impact of Job Complexity and Performance on CFO Compensation," Working Papers 0097, College of Business, University of Texas at San Antonio.
    12. Elsaid, Eahab & Davidson III, Wallace N., 2009. "What happens to CEO compensation following turnover and succession?," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 424-447, May.

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