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

Author

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  • Lionel Almeida

    (LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

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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