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The Effect of Mergers, Divestitures, and Board Composition on CEO Compensation Before and After the Financial Crisis

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  • Ralph Sonenshine
  • Nathan Larson
  • Michael Cauvel

Abstract

This paper revisits the determinants of CEO compensation using recent data (covering 125 firms from 2003 to 2012) spanning the 2008 financial crisis. Overall, consistent with earlier studies, we find firm size and board composition to be the most consistent indicators of CEO pay. However, pay becomes more performance-oriented in the years after the financial crisis, which may reflect tighter governance. We give particular attention to the role played by changes in the CEO’s scope due to mergers and divestitures – the latter has seldom been considered before. We also investigate how these factors differ by industry.

Suggested Citation

  • Ralph Sonenshine & Nathan Larson & Michael Cauvel, 2015. "The Effect of Mergers, Divestitures, and Board Composition on CEO Compensation Before and After the Financial Crisis," Working Papers 2015-08, American University, Department of Economics.
    • Handle: RePEc:amu:wpaper:2015-08
    DOI: 10.17606/rcr9-kk20
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    References listed on IDEAS

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    Cited by:

    1. Shashank Bansal & M. Thenmozhi, 2019. "Does Board Composition Matter to Institutional Investors?," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 18(2_suppl), pages 238-266, August.

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    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G3 - Financial Economics - - Corporate Finance and Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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