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Exploring Executive Bargaining Dynamics: An Empirical Investigation

Author

Listed:
  • Sonia B. Di Giannatale

    (Division of Economics, CIDE)

  • Itza Tlaloc Quetzalcoatl Curiel-Cabral

    (Division of Economics, CIDE)

  • Genaro Basulto

    (Tepper School of Business, Carnegie Mellon)

Abstract

This article empirically identifies changes in CEOs’ bargaining power using data from ExecuComp and Annual Snapshot databases. It employs a Pareto Weights representation of the agency model to bridge managerial power theory and standard agency theory, proposing an empirical equation to track changes in bargaining power over time. Findings reveal the pivotal role of salary and stock grants in CEO compensation, aligning with both managerial power and agency theories. Analysis also uncovers a significant relationship between CEO age and bargaining power stability. Differences in bargaining power estimates across sectors indicate a multifaceted nature of CEO compensation, influenced by organizational factors and company size. Specifically, in large-cap companies, future compensation instances, like option grants, significantly influence changes in bargaining power, while in mid-cap companies, both present and future compensation factors contribute. Small-cap companies, however, show changes in bargaining power primarily linked to salary, bonus, and stock grants.

Suggested Citation

  • Sonia B. Di Giannatale & Itza Tlaloc Quetzalcoatl Curiel-Cabral & Genaro Basulto, 2024. "Exploring Executive Bargaining Dynamics: An Empirical Investigation," Working Papers DTE 633, CIDE, División de Economía.
    • Handle: RePEc:emc:wpaper:dte633
    as

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    File URL: http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE633.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dynamic Analysis; Contract Theory; Executive Compensation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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