Dynamics and Convergence in Chief Executive Officer Pay
AbstractThis study investigates dynamics and convergence in CEO pay in Australia’s largest corporations over an 18 year period. Utilizing dynamic panel estimators, we find that CEO pay is driven by dynamic adjustments, firm size, board size, CEO tenure and firm performance. The largest pay-performance effect emerges for long-term incentive pay. We also show that by ignoring dynamics, prior studies may have understated the size of payperformance effects. Analysis of convergence shows a clear pattern of catch up among firms making CEO pay more equitable over time. The analysis points to efficiency in CEO remuneration contracts rather than managerial entrenchment.
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Bibliographic InfoPaper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2012_3.
Date of creation: 21 Mar 2012
Date of revision:
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CEO Pay; Dynamic Panel Data Analysis; Pay for Performance; Convergence;
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-03 (All new papers)
- NEP-BEC-2012-04-03 (Business Economics)
- NEP-EFF-2012-04-03 (Efficiency & Productivity)
- NEP-HRM-2012-04-03 (Human Capital & Human Resource Management)
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