Advanced Search
MyIDEAS: Login

Pay me Right: Reference Values and Executive Compensation

Contents:

Author Info

  • Aleksandra Gregoric
  • Saso Polanec
  • Sergeja Slapnicar

Abstract

This paper studies the impact of external reference values on managerial compensation contracts. We consider the effect of adoption of non-binding pay norms on actal remuneration behavior using a unique country example. We find that introduction of pay norms changed the reference values for CEOs and led to adjustment of executive compensation towards new equilibrium. These pay norms affected pay in firms with actual compensation below and above reference values. Further we find that reference values changed compensation in all types of firms, although executive compensation increased more in firms with more dispersed ownership and control. These results confirm the importance of reference values in bargaining process between owners and managers.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp220.pdf
Download Restriction: no

Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 22008.

as in new window
Length:
Date of creation: 2008
Date of revision:
Handle: RePEc:lic:licosd:22008

Contact details of provider:
Postal: De BĂ©riotstraat 34, B-3000 Leuven
Phone: +32 (0) 16 / 32 6598
Fax: +32 (0) 16 / 32 6599
Email:
Web page: http://www.econ.kuleuven.be/licos
More information through EDIRC

Related research

Keywords: executive compensation; bargaining; reference values; ownership structure;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. 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.
  2. Baker, George P & Jensen, Michael C & Murphy, Kevin J, 1988. " Compensation and Incentives: Practice vs. Theory," Journal of Finance, American Finance Association, vol. 43(3), pages 593-616, July.
  3. Mahmoud Ezzamel, 2002. "Pay Comparability Across and Within UK Boards: An Empirical Analysis of the Cash Pay Awards to CEOs and Other Board Members," Journal of Management Studies, Wiley Blackwell, vol. 39(2), pages 207-232, 03.
  4. Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 121(4), pages 1133-1165, November.
  5. Eriksson, Tor, 2003. "Managerial Pay and Executive Turnover in the Czech and Slovak Republics," Working Papers 03-3, University of Aarhus, Aarhus School of Business, Department of Economics.
  6. Alistair Bruce & Trevor Buck & Brian G. M. Main, 2005. "Top Executive Remuneration: A View from Europe," Journal of Management Studies, Wiley Blackwell, vol. 42(7), pages 1493-1506, November.
  7. Bebchuk, Lucian Arye & Fried, Jesse & Walker, David I, 2002. "Managerial Power and Rent Extraction in the Design of Executive Compensation," CEPR Discussion Papers 3558, C.E.P.R. Discussion Papers.
  8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  9. Jones, Derek C. & Kato, Takao, 1996. "The determinants of chief executive compensation in transitional economies: Evidence from Bulgaria," Labour Economics, Elsevier, vol. 3(3), pages 319-336, October.
  10. Georgellis, Yannis & Gregoriou, Andros & Tsitsianis, Nikolaos, 2008. "Adaptation towards reference values: A non-linear perspective," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 768-781, September.
  11. Marianne Bertrand & Sendhil Mullainathan, 2001. "Are Ceos Rewarded For Luck? The Ones Without Principals Are," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 901-932, August.
  12. Duozhe Li, 2004. "Bargaining with History Dependent Preferences," Econometric Society 2004 North American Summer Meetings 516, Econometric Society.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Andres, Christian & Fernau, Erik & Theissen, Erik, 2013. "Should I stay or should I go? Former CEOs as monitors," CFR Working Papers 12-02 [rev.], University of Cologne, Centre for Financial Research (CFR).
  2. Andres, Christian & Fernau, Erik & Theissen, Erik, 2012. "Is it better to say goodbye? When former executives set executive pay," CFR Working Papers 12-02, University of Cologne, Centre for Financial Research (CFR).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:lic:licosd:22008. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.