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The effects of CEO pay transparency in France. Benchmarking, `catching-up', and outsider scrutiny

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  • Lionel Almeida

    (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM])

Abstract

The study investigates the evolution of CEO pay after the implementation of new disclosure rules in France. It opposes a managerial labor market view in which firms compete for CEO talent, and a governance institutions view that embraces managerial power, outrage constraint, and agency issues. The findings first show that closely-monitored and below-average CEOs make the most of benchmarking to catch up to their peers. The catch-up effect is partly driven by competition for talent but also by imitation and perceived fairness. Second, public disclosure places CEO pay under outsider scrutiny, producing two distinct effects: most powerful and above-average CEOs receive lower pay rises, and minority shareholders pressure firms into rising bonuses for all CEOs. Overall, transparency yields a convergence of pay levels and higher ratios of bonuses. JEL: G32; G34; L22

Suggested Citation

  • Lionel Almeida, 2016. "The effects of CEO pay transparency in France. Benchmarking, `catching-up', and outsider scrutiny," Post-Print hal-02474780, HAL.
    • Handle: RePEc:hal:journl:hal-02474780
    DOI: 10.2139/ssrn.2787562
    Note: View the original document on HAL open archive server: https://hal.science/hal-02474780
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    References listed on IDEAS

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    More about this item

    Keywords

    CEO pay; benchmarking; managerial market; managerial power; corporate control;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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