Firm Diversification and CEO Compensation : Managerial Ability of Executive Enfrenchment ?  

Oleh:

Rose, Nancy L. ; Shepard, Andrea

Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Rand Journal of Economics vol. 28 no. 3 (1997), page 489-514.
Topik: diversification; firm diversification; CEO compensation; managerial ability; executive enfrenchment

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: RR10.1 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

Investigating the relationship between CEO compensation and firm diversification over 1985 - 1990, we find that the CEO of a firm with two lines of business averages 13% more in salary and bonus than the CEO of a similar - sized but undiversified firm, ceteris paribus. We explore two potential explanations for this : the match of higher - ability CEOs with firms that are more difficult to manage, and the association of diversification with CEO entrenchment. The data are more consistent with ability matching : the premium is invariant to CEO tenure, and incumbents who diversify their firms earn less than newly hired CEOs at already - diversified firms.

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