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Cronyism and Delaware Incorporation: An Examination on Excess Compensation

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  • Qian Xie

Abstract

This paper investigates whether Delaware incorporation relates to cronyism by examining excess director and CEO compensation. I find that excess director compensation is significantly and positively related to excess CEO compensation in both Delaware and non-Delaware firms. However, excess CEO compensation in non-Delaware firms is negatively associated with firm performance. The result indicates that cronyism does exist in non-Delaware firms but not in Delaware firms. Therefore, Delaware incorporation does not favor managers at the expense of shareholders.

Suggested Citation

  • Qian Xie, 2013. "Cronyism and Delaware Incorporation: An Examination on Excess Compensation," Accounting and Finance Research, Sciedu Press, vol. 2(4), pages 1-60, November.
    • Handle: RePEc:jfr:afr111:v:2:y:2013:i:4:p:60
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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