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CEOs

Author

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  • Marianne Bertrand

    () (Booth School of Business, NBER, CEPR, and IZA, University of Chicago, Chicago, Illinois 60637)

Abstract

This article starts with an overview of the characteristics of chief executive officers (CEOs). I discuss the rising importance of general skills over firm-specific skills and the growing share of externally recruited CEOs. I also discuss possible reasons for the underrepresentation of women and the overrepresentation of family members in the corporate suite. I then review the three main explanations that have been put forward to explain the surge in CEO compensation over the past 30 years: principal-agent view, rent extraction view, and market-based view. I assess the strengths and weaknesses of each of these explanations in light of the existing empirical research. Finally, I review work on how entrenched CEOs or cognitively biased CEOs may cause corporate practices to deviate from the maximization of firm value.

Suggested Citation

  • Marianne Bertrand, 2009. "CEOs," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 121-150, May.
  • Handle: RePEc:anr:reveco:v:1:y:2009:p:121-150
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.economics.050708.143301
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    More about this item

    Keywords

    skills; family; gender; compensation; entrenchment; cognitive biases;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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