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The Effect of Internationalization On CEO-Compensation

Author

Listed:
  • Oxelheim, Lars

    (Department of Business Administration, School of Economics and Management, Lund University)

  • Randøy, Trond

    (School of management Agder University College)

Abstract

This study addresses how firms’ internationalization affects CEO compensation. Based on a sample of Swedish listed firms we analyze the effect of internationalization through the product market (export), the capital market (foreign exchange listing), and the corporate governance market (foreign board membership). We find that internationalization with respect to the capital market and the corporate governance market strengthens the relationship between product market internationalization and CEO compensation. A higher degree of internationalization - via the capital and corporate governance markets - is found to be associated with shorter CEO tenure. We argue that part of the higher CEO compensation in international oriented firms reflects a risk premium for harsher monitoring and thus lower job security.

Suggested Citation

  • Oxelheim, Lars & Randøy, Trond, 2002. "The Effect of Internationalization On CEO-Compensation," Working Paper Series 2002/4, Lund University, Institute of Economic Research.
    • Handle: RePEc:hhb:lufewp:2002_004
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    Cited by:

    1. Vicente Cuñat & Maria Guadalupe, 2005. "How Does Product Market Competition Shape Incentive Contracts?," Journal of the European Economic Association, MIT Press, vol. 3(5), pages 1058-1082, September.
    2. Arpita Agnihotri & Saurabh Bhattacharya, 2019. "CEO Narcissism and Internationalization by Indian Firms," Management International Review, Springer, vol. 59(6), pages 889-918, December.

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    More about this item

    Keywords

    CEO compensation; internationalization; corporate governance; Sweden;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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