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Are CEOs in family firms paid like bureaucrats? Evidence from Bayesian and frequentist analyses

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  • Block, Jörn Hendrich

Abstract

The relationship between CEO pay and performance has been much analyzed in the management and economics literature. This study analyzes the structure of executive compensation in family and non-family firms. In line with predictions of agency theory, it is found that the share of base salary is higher with family-member CEOs than it is with nonfamily member CEOs. Furthermore, family-member CEOs receive a lower share of option pay. The paper's findings have implications for family business research and the executive compensation literature. To make the findings robust, the statistical analysis is performed with both Bayesian and classical frequentist methods.

Suggested Citation

  • Block, Jörn Hendrich, 2008. "Are CEOs in family firms paid like bureaucrats? Evidence from Bayesian and frequentist analyses," SFB 649 Discussion Papers 2008-033, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2008-033
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    References listed on IDEAS

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    Cited by:

    1. Palmberg, Johanna, 2012. "Family Control and Executive Compensation," Ratio Working Papers 186, The Ratio Institute.
    2. Amoako-Adu, Ben & Baulkaran, Vishaal & Smith, Brian F., 2011. "Executive compensation in firms with concentrated control: The impact of dual class structure and family management," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1580-1594.
    3. Engel, Pascal J. & Hack, Andreas & Kellermanns, Franz W., 2015. "Setting the right mix—Analyzing outside directors’ pay mix in public family firms," Journal of Family Business Strategy, Elsevier, vol. 6(2), pages 130-140.

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    More about this item

    Keywords

    Executive compensation; family firms; stock options; agency theory; Bayesian analysis;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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