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Does a "CEO Chairman" Guarantee Better Performance from a Firm?

Author

Listed:
  • Pavel Srbek

    (Czech University of Life Sciences Prague, Faculty of Economics and Management)

  • Ludwig O. Dittrich

    (Czech University of Life Sciences Prague, Faculty of Economics and Management)

Abstract

This paper provides a brief review of the state of knowledge in the field of agency theory. The managerial power approach assumes that a chief executive officer is able to affect the scale of his or her pay. However, Kaplan (2012) and others see a different picture of the corporate-governance landscape, hence they provide certain market-based explanations for high compensation. Our paper examines the relationship between a firm's performance and the amount of managerial compensation, and the ability of a CEO to affect a board's decision regarding his or her total compensation. The dataset consists of 75 companies traded in the capital market in the US. Our panel dataset covers a 10-year period from 2004 to 2013. We developed a single equation panel data model. The resulting parameter values provide a different picture of CEO power and the interconnection between a firm's performance and CEO pay in both sectors.

Suggested Citation

  • Pavel Srbek & Ludwig O. Dittrich, 2016. "Does a "CEO Chairman" Guarantee Better Performance from a Firm?," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 3, pages 145-160, September.
    • Handle: RePEc:cmn:journl:y:2016:i:3:p:145-160
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    References listed on IDEAS

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