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The Effect of Internationalization On CEO-Compensation

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Author Info
Oxelheim, Lars () (Department of Business Administration, School of Economics and Management, Lund University)
Randøy, Trond () (School of management Agder University College)

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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.

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Publisher Info
Paper provided by Lund University, Institute of Economic Research in its series Working Paper Series with number 2002/4.

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Length: 21 pages
Date of creation: 17 Dec 2002
Date of revision:
Handle: RePEc:hhb:lufewp:2002_004

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Postal: Institutet för Ekonomisk Forskning, Box 7080, SE-220 07 LUND, Sweden
Web page: http://www.lri.lu.se/
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Related research
Keywords: CEO compensation; internationalization; corporate governance; Sweden;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Murphy, Kevin J., 2000. "Performance standards in incentive contracts," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 245-278, December. [Downloadable!] (restricted)
  2. Core, John E. & Holthausen, Robert W. & Larcker, David F., 1999. "Corporate governance, chief executive officer compensation, and firm performance1," Journal of Financial Economics, Elsevier, vol. 51(3), pages 371-406, March. [Downloadable!] (restricted)
  3. Oxelheim, Lars & Randoy, Trond, 2003. "The impact of foreign board membership on firm value," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2369-2392, December. [Downloadable!] (restricted)
    Other versions:
  4. Brian J. Hall & Jeffrey B. Liebman, 1998. "Are CEOs Really Paid Like Bureaucrats?," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 653-691, August. [Downloadable!] (restricted)
    Other versions:
  5. Morck, R. & Yeung, B., 1991. "Why Investors Value Multinationality," Working Papers 282, Research Seminar in International Economics, University of Michigan.
    Other versions:
  6. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2004. "Why are foreign firms listed in the U.S. worth more?," Journal of Financial Economics, Elsevier, vol. 71(2), pages 205-238, February. [Downloadable!] (restricted)
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  7. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January. [Downloadable!] (restricted)
  8. Howe, John S. & Madura, Jeff, 1990. "The impact of international listings on risk : Implications for capital market integration," Journal of Banking & Finance, Elsevier, vol. 14(6), pages 1133-1142, December. [Downloadable!] (restricted)
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  11. repec:fth:michin:282 is not listed on IDEAS
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  14. David M Reeb & Chuck C Y Kwok & H Young Baek, 1998. "Systematic Risk of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 29(2), pages 263-279, June. [Downloadable!] (restricted)
  15. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April. [Downloadable!] (restricted)
  16. Jensen, Michael C, 1993. " The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Finance, American Finance Association, vol. 48(3), pages 831-80, July. [Downloadable!] (restricted)
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  17. Martin J. Conyon, Simon I. Peck, 1998. "Board size and corporate performance: evidence from European countries," European Journal of Finance, Taylor and Francis Journals, vol. 4(3), pages 291-304, September. [Downloadable!] (restricted)
  18. Robert M Grant, 1987. "Multinationality and Performance among British Manufacturing Companies," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 18(3), pages 79-89, September. [Downloadable!] (restricted)
  19. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April. [Downloadable!] (restricted)
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  20. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, 04. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Vicente Cuñat & María Guadalupe, 2005. "How Does Product Market Competition Shape Incentive Contracts?," CEP Discussion Papers dp0687, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
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